Hartford Accident Indemnity Co of Hartford v. Southern Pac Co, 45

Decision Date21 February 1927
Docket NumberNo. 45,45
CourtU.S. Supreme Court

Messrs. John Neethe, of Galveston, Tex., and E. C. Brandenburg, of Washington, D. C., for petitioner.

[Argument of Counsel from page 208 intentionally omitted] Mr. Roscoe H. Hupper, of New York City, for respondents.

[Argument of Counsel from pages 209-210 intentionally omitted] Mr. Chief Justice TAFT delivered the opinion of the Court.

The National Oil Transport Company, the owner of wooden oil tank barge Bolikow, filed a libel in the United States District Court for the Southern District of Texas against the Southern Pacific Company, alleging that the Bolikow, made fast to a dock in the harbor of the city of Galveston, was laden with a cargo of crude oil, from which a large part had been discharged; that an explosion took place in one of her tanks, causing fire; that the El Occidente, a steamer of the Southern Pacific Company, was injured by the fire; that the value of the barge after the explosion and fire was $250, and her pending freight at the time did not exceed $11,076.85; that the damage to the Occidente was due, not to the Bolikow, but to her own negligent management and the lack of power of the tug which attempted to take her to a safe place; that the claims of the owners of the Occidente were in excess of $484,000, and there were claims by persons on the barge for death and injuries from the fire, amounting to $50,000 in one case and $15,000 in another. The owner contested his liability and that of its barge, Bolikow, to any extent whatever, but, in case its liability was established, claimed and sought the benefit of the statutory limitation of its liability. Rev. St. §§ 4283, 4284, and 4285 (Comp. St. §§ 8021, 8022, 8023).

Pursuant to the court's order, the National Oil Transport Company, as principal, and the Hartford Accident & Indemnity Company, as surety, executed an ad interim stipulation that the former, as principal, and the latter, as surety, undertook in the sum of $11,326.85, with interest, that the transport company would file a bond or stipulation for the limitation of its liability as owner of the barge Bolikow, exe- cuted in due form of law for the value of the transport company's interest in the barge and her pending freight, with 6 per cent. interest thereon from December 23, 1920, within 10 days after such values were determined by appropriate proceedings in the court, and an order fixing such value was entered therein, and that, pending the filing of the formal stipulation, the ad interim undertaking should stand as security for all claims in the proceeding.

The court then made an order directing the issuing of a monition to claimants against the vessel and her owner, growing out of the explosion, and an injunction. Without further action as to fixing the value of the barge or its pending freight, the claimants came in, the cause proceeded to a final decree, after a report by a commissioner, the petition for limitation of liability was denied, the claims in whole or in part were allowed, and the decree proceeded:

'And it further appearing to the court that neither the petitioner nor its stipulator nor any other party or interest, has moved for or caused any reappraisal or appraisal of the petitioner's interest in said barge and her pending freight, or either of them, or caused any order to be entered by the court fixing such value, except as was done by the approval and filing of said ad interim stipulation as aforesaid, and the issuance and publication of a monition thereon as aforesaid, and it further appearing to the court that no bond for value other than said ad interim stipulation has been filed herein by the petitioner, and it appearing from the evidence introduced on the trial hereof, and the court here and now finding that the value of the petitioner's interest in said barge at the termination of her voyage is $250, and that the value of the petitioner's interest in the pending freight of said barge at the termination of said voyage is $11,076.85, and that the total value of said petitioner's interest in said barge and her pending freight at the termination of her said voyage is $11,326.85: It is therefore ordered and decreed that, unless this decree be satisfied or an appeal be taken therefrom within the time limited by law and the rules and practice of this court, the stipulator for value will cause the said petitioner to pay into court the sum of $11,326.85, the amount of the value of the petitioner's interest in the said barge and pending freight at the termination of her said voyage, with 6 per cent. interest from December 23, 1920, to be applied in payment of the costs of court, the remainder to be pro rated among the respective claimant respondents in proportion to the amounts of the decrees entered in their favor herein, or show cause why execution should not issue therefor, against goods, chattels, and lands of the stipulator for value.'

The Hartford Indemnity Company, the stipulator, appealed from this decree, which the Circuit Court of Appeals of the Fifth Circuit affirmed. 3 F.(2d) 923. We brought the case here by certiorari. 267 U. S. 590, 45 S. Ct. 462, 69 L. Ed. 802.

The contention of the petitioner is that it could become liable only in the event limitation of liability was granted, and, as that relief was denied, the stipulation ceased to be effective; that upon a denial of a limitation of liability there ceased to be a res in court, that the proceeding was no longer one in rem, and that suits for the claims against the shipowner must be conducted in a court having jurisdiction on other grounds.

It is surprising that no case has ever arisen in which the question here mooted has been directly decided, though the effect of a decision refusing limitation has been the subject of discussion in The Titanic (D. C.) 204 F 295, and in The Virginia (D. C.) 266 F. 437, 439. See also, Dowdell v. U. S. District Court (C. C. A.) 139 F. 444; In re Jeremiah Smith & Sons (C. C. A.) 193 F. 395; The Santa Rosa (D. C.) 249 F. 160.

The history and proper construction of the Limitation of Liability Act of 1851 (9 Stat. 635), now embodied in Revised Statutes, §§ 4282 to 4287 (Comp. St. §§ 8020-8025), are shown in a series of cases in this court, the chief of which is Norwich Co. v. Wright, 13 Wall. 104, 20 L. Ed. 585. Further consideration to this subject was given by the court in The Benefactor, 103 U. S. 239, 26 L. Ed. 351; in Providence & New York Steamship Co. v. Hill Manufacturing Co., 109 U. S. 578, 3 S. Ct. 379, 27 L. Ed. 1038; in The City of Norwich, 118 U. S. 468, 503, 6 S. Ct. 1150, 30 L. Ed. 134; in The Scotland, 118 U. S. 507, 6 S. Ct. 1174, 30 L. Ed. 153; in Butler v. Boston & Savannah Steamship Co., 130 U. S. 527, 9 S. Ct. 612, 32 L. Ed. 1017; and in Re Morrison, 147 U. S. 14, 34, 13 S. Ct. 246, 37 L. Ed. 60; in The Albert Dumois, 177 U. S. 240, 20 S. Ct. 595, 44 L. Ed. 751; in The Hamilton, 207 U. S. 398, 28 S. Ct. 133, 52 L. Ed. 264; and in La Bourgogne, 210 U. S. 95, 28 S. Ct. 664, 52 L. Ed. 973.

These decisions establish, first, that the great object of the statute was to encourage shipbuilding and to induce the investment of money in this branch of industry by limiting the venture of those who build the ships to the loss of the ship itself or her freight then pending, in cases of damage or wrong happening, without the privity, or knowledge of the shipowner, and by the fault or neglect of the master or other persons on board; that the origin of this proceeding for limitation of liability is to be found in the general maritime law differing from the English maritime law; and that such a proceeding is entirely within the constitutional grant of power to Congress to establish courts of admiralty and maritime jurisdiction (Norwich v. Wright, 13 Wall. 104, 20 L. Ed. 585); that to effect the purpose of the statute, admiralty rules Nos. 54, 55, 56, and 57 were adopted, by which the owner may institute a proceeding in a United States District Court in admiralty against one claiming damages for the loss, in which he may, deny any liability for himself or his vessel, but may ask that, if the vessel is found at fault, his liability as owner shall be limited to the value of the vessel as appraised after the occurrence of the loss and the pending freight for the voyage; that these damages shall include damages to goods on board; second, damages by collision to other vessels and their chargoes; and, third, any other damage or forfeiture done or incurred; that all others having similar claims against the vessel and the owner may be brought into concourse in the proceeding by monition, and enjoined from suing the owner and vessel on such claims in any other court; that the proceeding is equitable in its nature, and is to be likened to a bill to enjoin multiplicity of suit (Providence Steamship Co. v. Hill Manufacturing Co., 109 U. S. 578, 3 S. Ct. 379, 27 L. Ed. 1038); that by stipulation after appraisement the vessel and freight may be released, and the stipulation be substituted therefor; that on reference to a commissioner and the coming in of his report, it shall be determined, first, whether the owner and his vessel are liable at all; second, whether the owner may avoid all liability except that of the vessel and pending freight; third, what the amount of the just claims are; and, fourth, how the fund in court should be divided between the claimants. The cases show that the court may enter judgment in personam against the owner as...

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