Complaint of Caribbean Sea Transport, Ltd., 83-5806

• Citation: 748 F.2d 622
• Decision Date: 13 December 1984
• Docket Number: No. 83-5806,83-5806
• Parties: In the Matter of The Complaint of CARIBBEAN SEA TRANSPORT, LTD., as Owner, and Alfa Line Ltd., as Charterer, of M/S ANTILLE SUN, for Exoneration from or Limitation of Liability. CARIBBEAN SEA TRANSPORT, LTD. and Alfa Lines, Ltd., Petitioners-Appellants, v. Francisco RUSSO, et al., Claimants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 622

748 F.2d 622

1985 A.M.C. 1995

In the Matter of The Complaint of CARIBBEAN SEA TRANSPORT,

LTD., as Owner, and Alfa Line Ltd., as Charterer,

of M/S ANTILLE SUN, for Exoneration from

or Limitation of Liability.

CARIBBEAN SEA TRANSPORT, LTD. and Alfa Lines, Ltd., Petitioners-Appellants, v. Francisco RUSSO, et al., Claimants-Appellees.

No. 83-5806.

United States Court of Appeals, Eleventh Circuit.

Dec. 13, 1984.

Rehearing Denied Feb. 19, 1985.

Michael T. Moore, Holland & Knight, William F. Hamilton, Miami, Fla., for petitioners-appellants.

Arthur Roth, Miami, Fla., for claimant-appellee Francisco Russo.

William C. Norwood, Miami, Fla., for claimant-appellee Naviera.

Appeal from the United States District Court for the Southern District of Florida.

Before GODBOLD, Chief Judge, HILL, Circuit Judge, and PECK ^*, Senior Circuit Judge.

JAMES C. HILL, Circuit Judge:

This admiralty appeal challenges the district court's order requiring the plaintiff/appellant shipowner to post security pursuant to sections 183(a) and 183(b) of the Limitation of Liability Act, 46 U.S.C. Sec. 183 et seq. We affirm in part, but remand for a more complete hearing as to whether security need be posted pursuant to section 183(b).

This admiralty case arises from a collision between the M/V ANTILLES SUN (ANTILLES), a steel cargo carrier, and the CORAIN II (CORAIN). After leaving Miami on February 11, 1982, and discharging cargo at several Caribbean ports, the ANTILLES was on its way back to Miami from Kingston, Jamaica when the collision occurred in waters off Cuba on February 24, 1982. The ANTILLES sank in deep waters where salvage was impossible. Appellee-claimant Francisco Russo, the second mate on the CORAIN, apparently suffered a back injury as a result of the collision.

On July 27, 1982, plaintiff-appellant Caribbean Sea Transport, Ltd, the owner of the ANTILLES, filed a petition for exoneration from or limitation of liability in the district court, pursuant to 46 U.S.C. Sec. 183 et seq. and Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims (Admiralty Rules). Claims against the ANTILLES were then filed by cargo shippers, the owner of the CORAIN, and Russo.

On October 6, 1983, claimant Russo brought a motion pursuant to Admiralty Rule F(7) to require appellant to post security required by 46 U.S.C. Sec. 183 and Admiralty Rule F(1). Following a non-evidentiary hearing on November 4, 1983, the district court ordered that the appellant post security in the amount of $112,000 plus interest: $82,000 pursuant to section 183(a) and $30,000 pursuant to section 183(b). Appellants, who still have not posted the amount, appealed.

DISCUSSION

A. Background on Limitation of Liability in Admiralty.

The Limitation of Liability Act (Limitation Act), 46 U.S.C. Sec. 183 et seq., is intended to limit the liability of shipowners following maritime accidents. The Limitation Act provides that the liability of the shipowner for any maritime injury or loss shall be limited (to all but personal injury claimants, who may be entitled to a greater, but still limited, amount) to the extent of the shipowner's investment in and earnings from the voyage, provided that the injury or loss involves no privity or knowledge on the owner's part. Admiralty Rule F sets up the procedural provisions for limitation of liability actions.

The meat of the Limitation Act is contained in section 183, subsections (a) and (b), which provide that:

(a) The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not, except in the cases provided for in subsection (b) of this section, exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.

(b) In the case of any seagoing vessel, if the amount of the owner's liability as limited under subsection (a) of this section is insufficient to pay all losses in full, and the portion of such amount applicable to the payment of losses in respect of loss of life or bodily injury is less than $60 per ton of such vessel's tonnage, such portion shall be increased to an amount equal to $60 per ton, to be available only for the payment of losses in respect of loss of life or bodily injury. If such portion so increased is insufficient to pay such losses in full, they shall be paid therefrom in proportion to their respective amounts.

The Limitation Act's protection is typically triggered when the shipowner files a complaint seeking limitation of liability pursuant to section 185 and Admiralty Rule F(1). Rule (F)(1) also provides that as a condition to filing the complaint, the shipowner

shall deposit with the court, for the benefit of claimants, a sum equal to the amount or value of his interest in the vessel and pending freight, or approved security therefor, and in addition such sums, or approved security therefor, as the court may from time to time fix as necessary to carry out the provisions of the statutes as amended;

or, in the alternative, shall transfer his interest in the vessel and pending freight to a trustee. Admiralty Rule F(1). ¹ The posting of security must include six percent yearly interest. Id. If a claimant is at any time concerned that the amount of security posted is insufficient, Admiralty Rule F(7) provides that

[a]ny claimant may by motion demand that the funds deposited in court or the security given by the plaintiff be increased on the ground that they are less than the value of the plaintiff's interest in the vessel and pending freight. Thereupon the court shall cause due appraisement to be made of the value of the plaintiff's interest in the vessel and pending freight; and if the court finds that the deposit or security is either insufficient or excessive it shall order its increase or reduction. In like manner any claimant may demand that the deposit or security be increased on the ground that it is insufficient to carry out the provisions of the statutes relating to claims in respect of loss of life or bodily injury; and, after notice and hearing, the court may similarly order that the deposit or security be increased or reduced.

Once an action is filed and security posted, the court proceeds to determine if the owner should be exonerated from liability or if he is entitled to limitation of liability. An owner will be exonerated from liability when he, his vessel, and crew are found to be completely free from fault. Tittle v. Aldacosta, 544 F.2d 752, 755 (5th Cir.1977). To limit his liability to the amounts calculated under section 183, the shipowner must merely show that he had no privity to or knowledge of the negligence or unseaworthiness which caused injuries. Id. at 756. If the owner is not exonerated but prevails in his plea for limitation, the section 183 security fund is distributed on a pro rata basis to claimants and the owner's liability is at an end. Admiralty Rule F(8). Therefore, a determination of the amount of security that need be posted under section 183 constitutes a determination of the maximum amount of liability that the shipowner will be subject to under the Limitation Act.

B. Section 183(a) and Pending Freight.

As mentioned above, a condition to bringing a limitation action is that the shipowner deposit with the court as security a sum equal to the value of the vessel and pending freight, unless the owner transfers his interest in the vessel and freight to a trustee. The law is well established that the valuation of the vessel is its value at the termination of the voyage. Norwich Co. v. Wright, 13 Wall. (80 U.S.) 104, 20 L.Ed. 585 (1872). "Freight," as used in the Limitation Act, refers to the compensation received for carriage of goods, and not the goods themselves. "Pending freight" is the total earnings for the voyage, both prepaid and uncollected. The Main v. Williams, 152 U.S. 122, 131, 14 S.Ct. 486, 488, 38 L.Ed. 381 (1894); The William J. Riddle, 111 F.Supp. 657, 658 (S.D.N.Y.1953). If cargo is not delivered it is not earned and does not constitute "pending freight." Pacific Coast Co. v. Reynolds, 114 F. 877, 881-82 (9th Cir.), cert. denied, 187 U.S. 640, 23 S.Ct. 841, 47 L.Ed. 345 (1902).

In our present case it is undisputed that the vessel is lying at the bottom of the sea and has no value whatsoever. However, appellant raises a number of attacks on the court's $82,000 valuation of "freight pending on the voyage." Peeling away the appellant's various arguments, the bone of contention on this issue boils down to the factual question of what constitutes "the voyage" in this case. Appellant asserts that "the voyage" was merely the ship's return trip from Kingston to Miami. The appellee contends that "the voyage" encompasses the entire round trip of the ship from Miami back to Miami.

What constitutes a voyage is a question of fact, which depends on the circumstances of the situation. The William J. Riddle, 111 F.Supp. at 658. Where an accident occurs on the return half of a round-trip voyage, it may be that only the freight on the return voyage is "pending." For instance, in In re La Bourgogne, 210 U.S. 95, 28 S.Ct. 664, 52 L.Ed. 973 (1908), a vessel made trips between France and New York without any intermediate stops, discharging freight and picking up new freight at each end of the journey. The vessel collided with another ship on one of its trips from New York to France. The court held that each of these trips between France and New York or vice-versa was a separate voyage, so that the owner did not need to surrender freight earned in the ship's prior sailing from France to New York. Id.

However, if a round-trip voyage is equivalent to a "single...