Lake Tankers Corporation v. Henn

• Citation: 1 L.Ed.2d 1246,77 S.Ct. 1269,354 U.S. 147
• Decision Date: 10 June 1957
• Docket Number: No. 445,445
• Parties: LAKE TANKERS CORPORATION, Petitioner, v. Lillian M. HENN, Administratrix
• Court: United States Supreme Court

354 U.S. 147

77 S.Ct. 1269

1 L.Ed.2d 1246

LAKE TANKERS CORPORATION, Petitioner,

v Lillian M. HENN, Administratrix.

No. 445.

Argued May 6, 1957.

Decided June 10, 1957.

Rehearing Denied July 8, 1957.

See 354 U.S. 945, 77 S.Ct. 1421.

Mr. Eugene Underwood, New York City, for the petitioner.

Mr. Frank C. Mason, New York City, for the respondent.

Mr. Justice CLARK delivered the opinion of the Court.

This admiralty limitation proceeding resulted from a maritime disaster in 1954. The aggregate amount of all of the claims filed in the proceeding and for which the petitioner could be held liable if found at fault is less than the value of petitioner's vessels and their pending freight. The question presented is whether the respondent, the principal claimant, may, under these circumstances, proceed with her action in a state court, subject to the continuing jurisdiction of the federal court to protect petitioner's right to limited liability, to determine the obligation of the petitioner to respond in damages for the loss of the life of her husband. We agree with the disposition of the District Court as modified by the Court of Appeals.

Respondent's husband was a passenger on the pleasure yacht, Blackstone, which was involved in a collision on the Hudson River on July 10, 1954, with petitioner's tug, Eastern Cities, pushtowing petitioner's barge, L.T.C. No. 38. The Blackstone capsized and respondent's husband was drowned. The other 10 persons on board the yacht were rescued. Respondent, as her husband's administratrix, brought suit against the petitioner in a New York state court claiming $500,000 damages for the loss of her husband's life. She alleged that the loss was caused by Lake Tankers' negligent operation of both its tug and its barge. Actions by four other claimants were also commenced in the New York state courts against the petitioner for damages for personal injuries and for loss of the Blackstone.

Thereafter, Lake Tankers Corporation filed this proceeding in admiralty in the United States District Court for the Southern District of New York for exoneration from or limitation of liability. As required by the statute authorizing limitation proceedings¹ the petitioner filed approved security. While the first bond was only in the amount of $118,542.21, representing the petitioner's interest in its tug alone, thereafter a bond covering the barge in the amount of $165,000 was filed. Appropriate restraining orders were issued enjoining the prosecution or filing of any claims against Lake Tankers except in the limitation proceeding. There is no dispute in regard to the adequacy or correctness of the amount of the two bonds.

After petitioner instituted the limitation proceeding the respondent filed a claim for $250,000 in it covering the same loss asserted in her state court case. The 10 survivors, including those who had filed suits in the state court, also filed their claims in the limitation proceeding. These totaled only $9,525. All of the claimants, including respondent, have relinquished all right to any damage in excess of the amounts set forth in their respective claims in the limitation proceeding and expressly limited their recovery to those amounts. The respondent has amended her claim further by allocating $100,000 of her alleged damage to the tug and the remaining $150,000 to the barge. She has also filed stipulations agreeing neither to increase these claims, nor to enter into a judgment in excess of these amounts, and she has waived any claim of res judicata relative to the issue of the petitioner's right to limit liability if that issue should be passed on in the state court proceeding. The District Court on application then vacated the restraining order since the total fund exceeded the amount of the claims. Petition of Lake Tankers Corp. 137 F.Supp. 311. The Court of Appeals for the Second Circuit affirmed, entering an order, to which respondent has also agreed, with respect to the state court suit, as follows:

"If claimant obtains a judgment in her state court suit for an amount in excess of $100,000, an injunction will issue permanently enjoining her from collecting such excess unless the judgment rests on a special verdict allocating the amount as between the libelant as owner of the tug and as owner of the barge respectively. Thus if the judgment exceeds $100,000 and the jury finds libelant liable solely as owner of the tug, she will be enjoined from collecting any excess. If the jury finds that the libelant is liable solely as owner of the barge, she will be enjoined from collecting any amount in excess of $150,000." 2 Cir., 232 F.2d 573, 577.

On rehearing the Second Circuit, sitting en banc, reaffirmed its decision. 235 F.2d 783. We granted certiorari to pass upon the important jurisdictional question presented. 352 U.S. 914, 77 S.Ct. 216, 1 L.Ed.2d 121.

This Court has recently considered the cases which discuss the historical background of the Limited Liability Act, R.S. §§ 4281—4289, as amended, 46 U.S.C. §§ 181—196, 46 U.S.C.A. §§ 181 196, In British Transport Commission v. United States, 1957, 354 U.S. 129, 77 S.Ct. 1103. It was there pointed out that the Act was adopted primarily to encourage the development of American merchant shipping. The first section of the Act here involved contains its fundamental provision which declares that the liability for any damage arising from a disaster at sea which is occasioned without the privity or knowledge of the shipowner shall in no case exceed the value of the vessel at fault together with her pending freight, 46 U.S.C. § 183, 46 U.S.C.A. § 183. As Mr. Justice Van Devanter stated for a unanimous Court in White v Island Transportation Co., 1914, 233 U.S. 346, 351, 34 S.Ct. 589, 591, 58 L.Ed. 993, 'The succeedng sections are in the nature 'The succeeding sections are in the nature proceedings by which the first is to be made effective. Therefore, they should be so construed as to bring them into correspondence with it.' Among these sections dealing with the mechanics of effecting such limitation of liability is § 184 covering those incidents where 'the whole value of the vessel, and her freight for the voyage, is not sufficient to make compensation to each of (the claimants).' In that event, the section continues, 'they shall receive compensation from the owner of the vessel in proportion to their respective losses; and for that purpose' the owners 'may take the appropriate proceedings in any court * * *.' (Emphasis added.) The succeeding section provides that in such an event the owner 'may petition a district court of the United States * * * for limitation of liability within the provisions of this chapter * * *.' It further declares that upon compliance with its requirements 'all claims and proceedings against the owner with respect to the matter in question shall cease.' This provision is implemented by Rule 51 of our Admiralty Rules, 28 U.S.C.A. which spells out in more detail the manner in which the owner of any vessel who 'shall desire to claim the benefit of limitation of liability * * *' shall proceed. It is, therefore, crystal clear that the operation of the Act is directed at misfortunes at sea where the losses incurred exceed the value of the vessel and the pending freight. And, as is pointed out in British Transport Commission, supra, where the fund created pursuant to the Act is inadequate to cover all damages and the owner has sought the protection of the Act the issues arising from the disaster could be litigated within the limitation proceeding. Otherwise the purpose of the Act, i.e., limitation of the owner's liability, might be frustrated. Only in this manner may there be a marshalling of all of the statutory assets remaining after the disaster and a concurse of claimants. In...