Fed. Marine Terminals, Inc. v. Burnside Shipping Co.

Docket Number291.
Decision Date01 April 1969
Citation394 U.S. 404,22 L.Ed.2d 371,89 S.Ct. 1144
CourtU.S. Supreme Court

John W. Hough argued the cause for petitioner. With him on the briefs was Robert C. Keck.

Paul McCambridge argued the cause for respondent. With him on the brief was Lucian Y. Ray.

MR. JUSTICE STEWART delivered the opinion of the Court.

Under § 33 of the Longshoremen's and Harbor Workers' Compensation Act,1 an employer who pays compensation benefits to the representative of a deceased employee may be subrogated to the rights of the representative against third persons.2 The question presented by this case is whether a stevedoring contractor whose longshoreman employee was killed in the course of his employment is limited to this subrogation remedy in seeking reimbursement from a shipowner on whose vessel the longshoreman met his death. Both the District Court3 and the Court of Appeals4 held that statutory subrogation is the stevedoring contractor's exclusive remedy against the shipowner, and we granted certiorari to consider this novel question under the Act.5


According to the stipulation of facts, the M/V Otterburn, owned and operated by respondent Burnside Shipping Co., was under time charter to Federal Commerce and Navigation Co., a Canadian corporation affiliated with the petitioner, Federal Marine Terminals, Inc. Federal Commerce hired Marine Terminals to continue the operation, already commenced by the ship's crew, of preparing the vessel to receive a cargo of grain. While the ship was docked in Detroit, the crew had commenced installation of "grain feeders"—walled-in structures erected in the 'tween deck hatches to the height of the main deck hatch. After Marine Terminals had been employed to continue the work of readying the ship for its cargo, the boatswain, acting on the instructions of the ship's Chief Officer, "winged out" the deep tank lids—that is, pulled them outboard into the wings of the 'tween deck. No railing, wire, or guard of any kind was placed around the resulting deep tank openings.

Marine Terminals' employees began working on the Otterburn after it had been removed to Chicago. On the morning of the third day of work, a group of Marine Terminals' stevedores, supervised by Gordon McNeill, arrived at approximately 7 o'clock to continue with carpentry work in the 'tween deck as part of the last stages of completing a grain feeder in the area of the "winged out" deep tank lids. McNeill was last seen alive shortly after 8 a. m. At 8:45 a. m. his lifeless body was discovered lying at the bottom of one of the deep tanks. There were no witnesses to his 30-foot fall.

McNeill's widow filed a claim for benefits under the Act for herself and three minor children, and the Department of Labor entered a compensation order for weekly payments of $36.75 to the widow and $33.25 to the children. The potential total liability of Marine Terminals for these payments is approximately $70,000. As administratrix of McNeill's estate, his widow also filed a maritime wrongful death action against Burnside Shipping Co. in the United States District Court for the Northern District of Illinois. Burnside answered the complaint, denying that McNeill's death had been caused by its negligence or by its failure to furnish a seaworthy vessel.

Burnside also commenced a separate action in the same court against Marine Terminals seeking indemnification for any judgment it might be required to pay in the wrongful death action. The libel charged that, by virtue of the agreement with the time charterer to prepare the ship for its cargo, Marine Terminals "warranted that its services to the vessel would be performed in a safe, workmanlike and seamanlike manner." That warranty was alleged to have been breached and the accident caused by Marine Terminals' negligence, giving rise to an obligation to save Burnside harmless from all liability and expense occasioned by McNeill's death.

Marine Terminals filed an answer denying most of the allegations of the libel, and also filed a counterclaim seeking damages from Burnside for "all sums which have been paid or will be paid" as compensation benefits to McNeill's dependents. The counterclaim alleged that Burnside, as owner and operator in control of the Otterburn, owed the stevedoring contractor "the duty of providing and maintaining a safe place to work so that injury to the employees . . . would be avoided." Burnside had violated that duty, according to the counterclaim, by its negligence

"in failing to properly guard the deep tank opening, or make the passageway secure, or to cover up the said deep tank, and in failing to clear the passageways, and failing to provide adequate lighting in the area or to provide a safety railing around the deep tank opening, thereby causing, suffering and permitting the area and open deep tank to be a source of menace and danger."

Burnside moved to dismiss the counterclaim for failure to state a cause of action. Each party then filed a motion for summary judgment on its claim and counterclaim.

The District Court, finding that material factual disputes existed concerning the conduct of both parties, denied Burnside's motion for summary judgment on its complaint.6 But it did grant the motion to dismiss Marine Terminals' counterclaim. The court noted Marine Terminals' concession that its theory of a direct action against the shipowner was novel. Normally the stevedoring contractor is content with its remedy of subrogation to the rights of the deceased longshoreman's representative against whatever third party may be liable for the death, usually the shipowner. In this case, however, the applicable Illinois Wrongful Death Act limited the amount recoverable by the decedent's representative to $30,000,7 far short of Marine Terminals' potential liability of $70,000. The court recognized that "[t]he existence of such a direct right over is well established in certain situations,"8 but concluded that the employer's rights provided by the Longshoremen's and Harbor Workers' Compensation Act are exclusive and "prevent him from maintaining an independent cause of action against the third party tortfeasor."9

The Court of Appeals affirmed, agreeing that Marine Terminals' sole remedy is by subrogation under the Act. But while the District Court had implied that the stevedoring contractor would have had a direct action had it not been abrogated by the Act, the Court of Appeals appeared to assume that, in the absence of the statutory remedy, federal maritime law would permit no direct recovery from the shipowner:

"There is no common law direct action as the defendant argues. There is only the Longshoremen's and Harbor Workers' Compensation Act which creates an entire legal procedure in this part of admiralty law. We cannot search outside of the Act for common law remedies which do not exist. The Act is the source of all remedies."10

This case thus presents two questions. First, does § 33 of the Act exclude whatever other rights of action the stevedoring contractor might have against the shipowner for compensation payments to an employee or his representative? Second, if statutory subrogation is not an exclusive remedy, does the shipowner owe the stevedoring contractor any duty whose breach will give rise to a direct action? We consider these questions in order below.


The Court of Appeals was clearly mistaken in its assertion that "[t]he statutory method provides that the [stevedoring contractor] can sue only as a subrogee."11 Nothing on the face of § 33 of the Act purports to limit the employer's remedy against third persons to subrogation to the rights of the deceased employee's representative. The provision of § 33 that the employer's payment of compensation "shall operate as an assignment to the employer of all right of the legal representative of the deceased . . . to recover damages against such third person" contains no words of limitation. Congress thereby gave the employer, in return for his absolute liability to the employee's representative, part of the latter's rights against others. But the legislative grant of a new right does not ordinarily cut off or preclude other nonstatutory rights in the absence of clear language to that effect. When Congress imposed on the employer absolute liability for compensation, it explicitly made that liability exclusive.12 Yet in the same Act it attached no such exclusivity to the employer's action against third persons as subrogee to the rights of the employee or his representative.

Nothing in the legislative history of the Act remotely supports the construction adopted by the courts below. And we can perceive no reason why Congress would have intended so to curtail the stevedoring contractor's rights against the shipowner. The exclusivity of the statutory compensation remedy against the employer was designed to counterbalance the imposition of absolute liability; there is no comparable quid pro quo in the relationship between the employer and third persons. On the contrary, as we emphasized in Ryan Stevedoring Co. v. Pan-Atlantic S. S. Corp., 350 U. S. 124, the Act is concerned only with the rights and obligations as between the stevedoring contractor and the employee or his representative. It does not affect independent relationships between the stevedoring contractor and the shipowner. Neither this Court13 nor, before this case, any other court14 has held that statutory subrogation is the employer's exclusive remedy against third party wrongdoers, and we decline to so hold today.


We must also reject the implication of the Court of Appeals' opinion that under federal maritime law the shipowner owed the stevedoring contractor no duties whose breach would give rise to a direct action for damages. As we held in Kermarec v. Compagnie Generale Transatlantique, 358 U. S. 625, 632, "the owner of a ship in navigable waters owes to all who...

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