Flink v. Paladini

Citation73 L.Ed. 613,279 U.S. 59,49 S.Ct. 255
Decision Date05 March 1929
Docket NumberNo. 299,299
PartiesFLINK v. PALADINI et al
CourtUnited States Supreme Court

Messrs. H. W. Hutton and R. T. Lynch, both of San Francisco, Cal., for petitioner.

[Argument of Counsel from pages 59-61 intentionally omitted] Mr. Ira S. Lillick, of San Francisco, Cal., for respondents.

Mr. Justice HOLMES delivered the opinion of the Court.

The petitioner suffered a severe injury on the high seas while employed as an engineer on the tugboat Henrietta belonging to A. Paladini, Incorporated, a corporation of the State of California. He sued the corporation and also the respondents, the stockholders of the same, seeking to hold the latter liable under the Constitution of the State, article 12, § 3, and the Civil Code, § 322, which provide that each stockholder shall be individually and personally liable for such proportion of all its debts and liabilities contracted during the time he was a stockholder, as the amount of stock owned by him bears to the whole of the subscribed capital stock. The respondents took proceedings in the District Court of the United States to limit their liability under the Acts of Congress, and the limitation was established by the Circuit Court of Appeals for the Ninth Circuit under R. S. § 4283 (Code, title 46, § 183 (46 USCA § 183)), and the Act of June 26, 1884, c. 121, § 18, 23 Stat. 57 (Code, title 46, § 189 (46 USCA § 189)) 26 F.(2d) 21. These statutes, it will be remembered, provide for the limitation of the liability of shipowners to the value of the vessel and pending freight, and of part owners to their proportional share. The argument of the present petitioner is that the stockholders of A. Paladini, Inc., were not the owners of the Henrietta and that their liability under the law of California was an independent one voluntarily assumed by contract, with which the Acts of Congress do not interfere.

The Circuit Court of Appeals disposed of the case after a thorough discussion. It is unnecessary to do more than to make a short statement of the points. The purpose of the act of Congress was 'to encourage investment by exempting the investor from loss in excess of the fund he is willing to risk in the enterprise.' (C. C. A.) 26 F.(2d) 24; Richardson v. Harmon, 222 U. S. 96, 103, 32 S. Ct. 27, 56 L. Ed. 110; Hartford Accident & Indemnity Co. v. Southern Pacific Co., 273 U. S. 207, 214, 47 S. Ct. 357, 71 L. Ed. 612. For this purpose no rational distinction can be taken between several persons owning shares in a vessel directly and making the same division by putting the title in a corporation and distributing the corporate stock. The policy of the statutes must extend equally to both. In...

To continue reading

Request your trial
48 cases
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • June 30, 1977
    ...vessel." (Emphasis supplied) . . .. This same sort of broad construction was taken of the word owner in Flink v. Paladini, 1929, 279 U.S. 59, at page 63, 49 S.Ct. 255, 73 L.Ed. 613, where the Court "We are of the opinion that the words of the limitation acts must be taken in a broad and pop......
  • Beiswenger Enterprises Corp. v. Carletta
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • June 27, 1996
    ...claimants effectively violated the injunction restraining the institution of suits against BEC. See Flink v. Paladini, 279 U.S. 59, 62-63, 49 S.Ct. 255, 255, 73 L.Ed. 613 (1929) (holding that the stockholders of a corporation owning a vessel are entitled to invoke the Limitation Act). The d......
  • Admiral Towing Company v. Woolen
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • April 18, 1961
    ...given a broad construction so as to achieve Congress' purpose: to induce and encourage investment in shipping. Flink v. Paladini, 1929, 279 U.S. 59, 49 S.Ct. 255, 73 L.Ed. 613; American Car & Foundry Co. v. Brassert, 1933, 289 U.S. 261, 263, 53 S. Ct. 618, 77 L.Ed. 1162. In recent cases the......
    • United States
    • U.S. District Court — Southern District of Florida
    • February 24, 1989
    ...purpose behind the Limitation Act was to protect the individual investor in commercial ship property. See Flink v. Paladini, 279 U.S. 59, 49 S.Ct. 255, 73 L.Ed. 613 (1929). The Act was passed in 1851 at a time in American legal history when entities with limited liability, like the corporat......
  • Request a trial to view additional results
1 books & journal articles
  • What Do Stockholders Own? The Rise of the Trading Price Paradigm in Corporate Law.
    • United States
    • The Journal of Corporation Law Vol. 47 No. 2, January 2022
    • January 1, 2022
    ...equitable owners of the property and assets of the corporation..."); see also Paladini v. Flink, 26 F.2d 21, 23 (9th Cir. 1928), aff'd, 279 U.S. 59 (1929) ("[T]echnically speaking, stockholders are not owners; but, in a broad popular sense, and for certain purposes in a legal sense, they ar......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT