FEDERAL MARINE TERMINALS V. BURNSIDE SHIPPING

• Decision Date: 01 April 1969
• Citation: 394 U. S. 404
• Court: U.S. Supreme Court

Federal Marine Terminals, Inc. v. Burnside Shipping Co., Ltd.

No. 291

Argued January 16, 1969

Decided April 1, 1969

394 U.S. 404

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

Petitioner, Marine Terminals, was hired by its affiliate, the time charterer of respondent's ship, to continue readying the vessel, then in Chicago, for its grain cargo.While that operation (which the ship's crew had begun) was in progress, one of petitioner's employees was killed by falling into an unprotected deep tank opening.The employee's widow filed a claim under the Longshoremen's and Harbor Workers' Compensation Act, and compensation was awarded against petitioner for weekly payments, the potential total liability for which is about ,000.As administratrix of the estate, the widow also filed a wrongful death action against respondent in the District Court, under an Illinois statute which then limited the amount recoverable to ,000.Respondent sued Marine Terminals for indemnification for any judgment it might be required to pay in the wrongful death action, charging that petitioner's negligence had breached its warranty that services to the vessel would be performed "in a safe, workmanlike and seamanlike manner," and gave rise to an obligation to save respondent harmless from liability occasioned by the employee's death.Petitioner counterclaimed for compensation benefits paid or to be paid to the employee's dependents, alleging that respondent owed petitioner as stevedoring contractor, "the duty of providing and maintaining a safe place to work" which respondent allegedly breached by failing to protect the deep tank opening.The District Court granted respondent's motion to dismisspetitioner's counterclaim.Though it recognized the availability at common law in certain situations of a direct right over, the court concluded that petitioner's sole remedy is under § 33 of the Longshoremen's and Harbor Workers' Compensation Act, which provides that an employer paying compensation benefits to a deceased employee's representative may be subrogated to the rights of the representative against third persons.The Court of Appeals, holding the statutory remedy, in any event, exclusive, affirmed.

Held:

1.Nothing on the face of § 33 of the Longshoremen's and Harbor Workers' Compensation Act or in the Act's legislative history limits the employer's remedy against third persons to subrogation

Page394 U. S. 405

to the rights of the deceased employee's representative.P P. 412-414.

2.Federal maritime law imposes on the shipowner a duty to the stevedoring contractor of due care under the circumstances, and recognizes a direct tort action against the shipowner to recover the amount of compensation payments occasioned by the shipowner's negligence.P P. 414-418.

3.Direct action otherwise than in tort by the stevedoring contractor against the shipowner may also be available.P P. 418-422.

392 F.2d 918, reversed and remanded.

MR. JUSTICE STEWARTdelivered the opinion of the Court.

Under § 33 of the Longshoremen's and Harbor Workers' Compensation Act, [^{Footnote 1}] an employer who pays compensation

Page394 U. S. 406

benefits to the representative of a deceased employee may be subrogated to the rights of the representative

Page394 U. S. 407

against third persons.[^{Footnote 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 Court[^{Footnote 3}] and the Court of Appeals[^{Footnote 4}] 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.[^{Footnote 5}]

I

According to the stipulation of facts, the M/V Otterburn, owned and operated by respondentBurnside 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

Page394 U. S. 408

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 .75 to the widow and .25 to the children.The potential total liability of Marine Terminals for these payments is approximately ,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

Page394 U. S. 409

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

Page394 U. S. 410

complaint.[^{Footnote 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 ,000, [^{Footnote 7}] far short of Marine Terminals' potential liability of ,000.The court recognized that "[t]he existence of such a direct right over is well established in

Page394 U. S. 411

certain situations," [^{Footnote 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."[^{Footnote 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.[^{Footnote 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...