Olympic Towing Corporation v. Nebel Towing Company

• Decision Date: 23 March 1970
• Docket Number: No. 26386.,26386.
• Citation: 419 F.2d 230
• Parties: OLYMPIC TOWING CORPORATION, Plaintiff-Appellee, v. NEBEL TOWING COMPANY, Inc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

419 F.2d 230 (1969)

OLYMPIC TOWING CORPORATION, Plaintiff-Appellee, v. NEBEL TOWING COMPANY, Inc., et al., Defendants-Appellants.

No. 26386.

United States Court of Appeals Fifth Circuit.

July 9, 1969.

As Amended November 24, 1969.

Rehearing Denied and Rehearing Denied November 24, 1969.

Certiorari Denied March 23, 1970.

John Poitevent, John W. Sims, New Orleans, La., for defendants-appellants.

Cornelius G. Van Dalen, Eldon T. Harvey, III, New Orleans, La., for plaintiff-appellee.

Edward C. Kalaidjian, New York City, for amicus curiae.

Before GEWIN, McGOWAN^* and MORGAN, Circuit Judges.

Rehearing Denied and Rehearing En Banc Denied November 24, 1969.

Certiorari Denied March 23, 1970. See 90 S.Ct. 1120.

GEWIN, Circuit Judge:

The appellee, Olympic Towing Corporation, brought this suit in the United States District Court for the Eastern District of Louisiana against the appellants — Nebel Towing Company, Inc. and Nebel's insurer, United States Casualty Company — to recover damages occasioned by the sinking of Olympic's vessel, the M/V CARINTHIA, allegedly resulting from the improper operation of Nebel's vessel,¹ the M/V G-H, and her tow. The suit against Nebel's insurer was brought pursuant to Louisiana's direct action statute.² Nebel thereafter petitioned the district court for exoneration from liability on the ground that the G-H was not the cause of the CARINTHIA's sinking; alternatively, Nebel sought to limit its liability, under the federal Limitation of Liability Act,³ to the amount of its interest in the G-H and the freight pending (towage charges). After a full trial, the district court found, inter alia, that the G-H had caused the CARINTHIA to sink but that the owner had been without privity or knowledge of any wrongdoing; accordingly, the court held that Nebel was not entitled to be exonerated but was entitled to limit its liability. However, the court held that the Limitation Act is a personal defense available only to the vessel owner; thus the court held that Nebel's insurer could not limit the amount recoverable in the direct actions.⁴ Nebel and its insurer, supported by the American Institute of Marine Underwriters as amicus curiae, appeal from the court's rulings denying exoneration and holding limitation of liability to be a personal defense. Olympic cross-appeals from the court's ruling allowing Nebel to limit liability. We affirm the judgment of the district court.

I

Virtually all the evidence in this case pertinent to the question of liability is disputed. However, a bare outline of the facts surrounding the central incident is discernible in the district court's pre-trial order. Sometime about midnight on October 19, 1961, the G-H and the CARINTHIA were traveling in opposite directions in the Gulf Intracoastal Waterway, the G-H moving westward and the CARINTHIA moving eastward and each approaching Mile 120. The G-H was towing five barges astern and the CARINTHIA was pushing two barges ahead. Another tug, the CEPHEUS II, was following the CARINTHIA in order to take advantage of the latter's radar in case of dense fog. Mile 120 falls directly in the middle of two bends in the Waterway, which forms a sort of attenuated "S" at that point. Apparently because of the difficulty of navigating the double bend, the vessels communicated by radio and agreed that the G-H would "hold up" east of the bends and let the CARINTHIA pass port to port. The CARINTHIA subsequently passed the G-H somewhere in the vicinity of Mile 120. However, in the process of passing, the CARINTHIA veered out of the channel toward the south bank and struck an unidentified underwater object. She immediately began to take more water than her pumps could handle. When it became clear that efforts to keep her afloat would fail, she moved up the bank where she finally rolled over on her side. The district court found, as Olympic had contended, that the G-H had permitted her barges to swing beyond mid-channel, thus forcing the CARINTHIA to leave the channel in order to avoid collision. Therefore, the court concluded that the sinking of the CARINTHIA was attributable to the embarrassment of her navigation by the G-H.

Since all testimony directly concerning the events upon which liability hinges was admitted by way of depositions, and our ability to evaluate this evidence is comparable to that of the trial court, the application of the "clearly erroneous" standard is less stringent.⁵ Granting this, however, Nebel has gained nothing, for the fact is that we are not inclined to disturb the district court's findings. The two witnesses who testified on behalf of Olympic — the captains of the CARINTHIA and the CEPHEUS II — described the crucial events in one light, while Nebel's two witnesses — the captain and deckhand of the G-H — related entirely inconsistent details. The district court prefaced its findings of fact with this cogent statement:

A. K. Billiot was in control of a vessel, the CEPHEUS II, which was not directly involved with this litigation. Indeed, he occupies the position of a disinterested bystander, with no ostensible purpose for siding with the interests of the M/V CARINTHIA as against the interests of the M/V G-H. Also of significance is the fact that a comprehensive statement taken from Billiot within a few days of the incident involved is part of the record and does not vary in any important detail from his subsequent statement or his deposition testimony.

The testimony of Adkinson relief captain on the G-H is in hopeless conflict with that of Dicks relief captain on the CARINTHIA on virtually every critical link in the chain of events culminating in this incident. Coulter deckhand on the G-H who would naturally be expected to corroborate Adkinson, does so on some points, but contradicts the testimony of his captain in many significant areas.

Therefore, in arriving at its findings the Court relied heavily on the testimony of Billiot which substantiates the account of this incident as related by Dicks. Accordingly, the credence placed in the testimony of Adkinson and Coulter decreased as the gap between their account and that of Dicks and Billiot widened. Libelant bore its burden of proof, establishing a prima facie case of liability, and the evidence adduced by respondent simply lacks the convincing force necessary to defeat libelant\'s claim.

It may be conceded that the record before this court contains considerable evidence favorable to Nebel's position. However, when the evidence is in complete conflict, the court must accept one version of the facts and reject the contrary version. Nebel's argument invites us to select its version and draw inferences from ambiguities which are favorable to its position. We must decline the invitation. In the circumstances of this case, we think the district court's approach was sound and that its findings are adequately supported.

Nebel also argues that, even if the tow of the G-H did force the CARINTHIA out of the channel, the sinking of the CARINTHIA was not proximately caused by the G-H because the crew of the G-H could not foresee that the CARINTHIA would strike a submerged object. Nebel relies upon testimony to the effect that it is unusual for a vessel to suffer damage when it runs outside the channel. Nebel argues that an event is not foreseeable unless it is a probable consequence of an act.

Generally, "proximate cause" in the admiralty context is defined as "that cause which in a direct, unbroken sequence produces the injury complained of and without which such injury would not have happened."⁶ This definition obviously describes a cause-in-fact principle, while proximate cause in the common law is generally a question of the extent of the tortfeasor's duty.⁷ Nebel here is clearly relying upon the latter concept. However, we cannot agree with Nebel's statement of the standard for determining proximate causation. We think that, in order for a risk to be foreseeable, "the consequences must be a normal, substantial part of the risk, which a reasonable man would recognize as fairly to be taken into account by the defendant at the time of his act."⁸ Under this standard, it is patent that the G-H should reasonably have foreseen that some damage might result from forcing the CARINTHIA to leave the channel.

We must also reject Olympic's contention that Nebel should have been denied the right to limit its liability. Under the Limitation Act, a vessel owner can limit its liability only if the owner is without "privity or knowledge" of the act causing the loss.⁹ Olympic attempts here to marshal sufficient facts to attribute privity or knowledge to a shareholder and officer of Nebel. However, the attempt fails because, as the district court found, there is simply nothing in the record which could be considered privity or knowledge, as broad and vague as those terms are.¹⁰ Thus we think that the court below properly permitted Nebel to limit its liability.

II

The appellants and the amicus curiae launch a broad scale and many-faceted attack on the district court's holding that Nebel's insurer could not take advantage of Nebel's right to limit its liability. When the question presented here was before this court over fifteen years ago, we held that limitation was not available to an insurer in a direct action suit.¹¹ The Supreme Court reversed in Maryland Cas. Co. v. Cushing,¹² a 4-1-4 decision which established a procedural chronology for that case and implicitly disposed of many questions raised here. Four members of the Court took the view that Louisiana's direct action statute was in conflict with the Limitation Act and therefore that the state statute must fall before paramount federal law.¹³ Four other members agreed with this court, seeing no conflict whatever.¹⁴ However, neither faction carried the day, for Mr. Justice Clark did not agree entirely with either and his vote was necessary to form a majority. Justice Clark saw no reason to invalidate Louisiana's s...