Gibboney v. Wright

Decision Date22 August 1975
Docket NumberNo. 73-3577,73-3577
Citation517 F.2d 1054,1975 A.M.C. 2071
PartiesPhil GIBBONEY, as owner of the SAILBOAT LOVE MACHINE in an action for exoneration from or limitation of liability, Petitioner-Appellee-Cross-Appellant, v. Carol WRIGHT and her minor children, Forest and Simeon Wright, Respondents-Appellants-Cross-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

John M. Brumbaugh, Miami, Fla., for respondents-appellants.

George O. Mitchell, Miami, Fla., for petitioner-appellee.

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

Before BROWN, Chief Judge, and AINSWORTH and DYER, Circuit Judges.

BROWN, Chief Judge:

This appeal attacks the District Court's order granting limitation of liability to an owner of a sailing vessel on the grounds that the owner had privity or knowledge of the defect which gave rise to the injury. The shipowner, in turn, appeals from the order denying exoneration. We affirm.

In February of 1971 Phil Gibboney placed an order with Raymond Creekmore for the construction of a thirty foot racing sloop, named, of all things, the LOVE MACHINE, to be built to Creekmore's specifications. By January of 1972, although considerable interior work remained to be finished, the hull was complete, and so, on the 14th the boat was placed in the water to perform an initial hull test. At the same time Gibboney arranged for a survey to be performed by Donald J. Mahoney & Co., a local Lloyds marine surveyor with an eye toward obtaining insurance on the boat. In order to more closely approximate the trim of the boat when completed, the fuel tank for the auxiliary motor was placed as closely as possible in the position it was to occupy upon completion and filled with water.

After completing his inspection the surveyor, Brian Mahoney, made four recommendations to Creekmore and Gibboney. One of these the one that concerns us here did not appear in the final formal report that the fuel tank should be bulkheaded and strapped in position. Mahoney testified that Creekmore told him it would be done "within a short period of time." Some days later, after the boat had been returned to the Creekmore yard for completion, another inspection was made by Angel Naya, also a Mahoney & Co. employee. Naya did not inspect the fuel tank installation. Nevertheless, relying on Creekmore's earlier assurance he would follow up on Mahoney's recommendation, the surveyors in their final report dated January 27 described the fuel tank as "Bulkhead(ed) & strapped."

The LOVE MACHINE was completed and delivered to Gibboney at St. Petersburg, Florida in February. After appropriate shakedown Gibboney entered the sloop on the racing circuit and for the next five or six months sailed it without incident. On several occasions Harlan Wright, the father of the two small boys who are appellants here, crewed aboard the LOVE MACHINE. In addition, Wright, a shipfitter by trade, performed more than a hundred hours' worth of general maintenance on the boat for pay during this period.

That Mahoney and Naya ought never have relied simply on Creekmore's promise to secure the fuel tank became tragically clear on July 4, 1972. On that day at the Coral Reef Yacht Club Harlan Wright approached Gibboney, who had just finished cleaning up the boat after the Miami-Bahamas race the previous weekend, and asked if he could borrow the LOVE MACHINE to take his family to see a fireworks display that same evening. Gibboney assented.

Around seven o'clock Wright with his wife and two small sons returned to the Yacht Club and boarded the LOVE MACHINE. Prior to getting underweigh Wright ascertained that the fuel tank was virtually empty and so motored to the Merrill-Stevens dock a short distance away to purchase fuel. After fueling, Wright waited three to five minutes and then started the motor. While in the process of casting off from the dock, a flash fire occurred, the flames leaping out of the cabin, through the companionway and burning the two boys standing near the open hatch.

Subsequent inspections revealed the probable cause of the fire. Fire Inspector T. L. Williams of the Miami Fire Prevention Bureau was called to the scene immediately after the fire. Captain Milton Jones, an experienced marine surveyor, examined the boat the next day before it was moved from the Merrill-Stevens fueling dock. Both agreed. The fuel tank was not secured in any way. The hose connecting the fuel tank to the filler pipe mounted in the cockpit had separated from the filler pipe because the fuel tank had shifted forward some two inches. Consequently, the six gallons of fuel pumped by Wright into the filler pipe had gone directly into the bilges instead of into the tank. 1

In the fall of 1972, Carol Wright, the mother of the injured boys, filed two separate personal injury suits in the Florida State Court against Phil Gibboney as owner and Raymond Creekmore as builder of the LOVE MACHINE. Wright alleged that Gibboney negligently maintained the LOVE MACHINE and that Creekmore negligently installed the fuel system in failing properly to secure the fuel tank.

On December 13 Gibboney filed a petition for exoneration from or limitation of liability in the United States District Court for the Southern District of Florida. 46 USCA § 183 et seq. Gibboney filed the traditional ad interim stipulation for the value of the LOVE MACHINE in the amount of $20,000.00. Claimants were enjoined from further prosecution of their cases 2 in state court and on January 26, 1973 Wright filed her answer and made claim for damages of $1,000,000.00 for each of the boys, an amount far in excess of the potential limitation fund.

After a trial on the Admiralty side of the District Court, the Judge entered his order denying exoneration but limiting liability to the stipulated value of the boat ($20,000.00). It is from this order that the appeal is taken.

Claimants assert that the District Court was in error in (i) not extending the "personal participation" standard of Coryell v. Phipps, 1943, 317 U.S. 406, 411, 63 S.Ct. 291, 293, 87 L.Ed. 363, 367, 1943 A.M.C. 18, 22, to include negligent failure to discover, (ii) finding that Gibboney did not have privity or knowledge of the defectively secured fuel tank, and (iii) in not finding that he had privity or knowledge due to his vicarious liability for the report of his agent, Brian Mahoney. Gibboney, of course, asserts that he did not have privity or knowledge of the defect and, as an anchor to windward, cross-appeals claiming that the District Could should have granted exoneration because, although the LOVE MACHINE was unseaworthy, his duty to the Wrights was not to provide a seaworthy vessel but rather merely to exercise reasonable care.

At the outset, we acknowledge that contemporary thought, see e. g. Petition of Porter, S.D.Tex., 1967, 272 F.Supp. 282, 1968 A.M.C. 2310; Gilmore & Black, The Law of Admiralty 880-84 (2d Ed. 1975), finds little reason for allowing private owners of pleasure craft to take advantage of the somewhat drastic for the injured claimants provisions of the Limitation Act. 3 Nevertheless, the cases, 4 as well as Congress, 5 have spoken with a clear voice. And we must heed their words.

Given then that the weekend sailor is as privileged to limit liability for damages committed by his yacht as are hard-pressed commercial owners for those by their multi-tonnaged merchantmen plying their trade across the crowded shipping lanes, the question becomes whether Gibboney had "privity or knowledge" of the defectively secured tank. 46 U.S.C.A. § 183(a).

What is meant by privity or knowledge is not easy to pin down. Older cases state that the Limitation Act imposes upon shipowners a lower standard than the duty to exercise due diligence of the Harter Act, 46 U.S.C.A. § 191 and the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1303. Earle & Stoddart v. Ellerman's Wilson Line, 1932, 287 U.S. 420, 426, 53 S.Ct. 200, 201, 77 L.Ed. 403, 407, 1933 A.M.C. 1, 3; Southern Pacific Co. v. United States, 2 Cir., 1934, 72 F.2d 212, 215, 1934 A.M.C. 1185, 1189. More recent cases, however, have indicated a substantial similarity in the two standards. Asbestos Corp. v. Compagnie de Navigation Fraissinet, S.D.N.Y., 1972, 345 F.Supp. 814, 1972 A.M.C. 2581; Accinanto Ltd. v. Cosmopolitan Shipping Co., D.Md., 1951, 99 F.Supp. 261, 1951 A.M.C. 1464. In any event it seems clear that privity or knowledge must turn on the facts of the individual case. Coryell v. Phipps, 1943, 317 U.S. 406, 411, 63 S.Ct. 291, 293, 87 L.Ed. 363, 368, 1943 A.M.C. 18, 22.

In Coryell v. Phipps, Justice Douglas drew a distinction between the privity or knowledge of a corporate owner and that of an individual owner. In denying the applicability of cases involving corporate owners, he stated "those cases are no authority for holding that the negligence of a subordinate may be imputed to an individual owner so as to place him in privity within the meaning of the statute." Id. at 410, 63 S.Ct. at 293, 87 L.Ed. at 367, 1943 A.M.C. at 21. Rather, for individual owners privity or knowledge "means some personal participation of the owner in the fault or negligence which caused or contributed to the loss or injury." Id, at 411, 63 S.Ct. at 293, 87 L.Ed. at 367, 1943 A.M.C. at 22.

In contention (i) appellants urge on us a number of cases, including some of our own, that hold that the owner has privity or knowledge "where he had means of knowledge or where knowledge would have been...

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