Hercules, Inc. v. Stevens Shipping Co., Inc.

• Decision Date: 22 February 1983
• Docket Number: 78-1887,Nos. 78-1505,s. 78-1505
• Citation: 698 F.2d 726
• Parties: HERCULES, INC., Plaintiff, v. STEVENS SHIPPING CO., INC., et al., Defendants, DETCO TOWING CO., INC., Defendant-Appellee, v. AETNA CASUALTY & SURETY CO., Intervenor-Appellant. HERCULES, INC., Plaintiff, v. STEVENS SHIPPING CO., INC., et al., Defendants, ESCAMBIA TREATING CO., Defendant-Appellant, v. DETCO TOWING CO., INC., Defendant-Appellee. . *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 726

698 F.2d 726

HERCULES, INC., Plaintiff, v. STEVENS SHIPPING CO., INC., et al., Defendants, DETCO TOWING CO., INC., Defendant-Appellee, v. AETNA CASUALTY & SURETY CO., Intervenor-Appellant.

HERCULES, INC., Plaintiff, v. STEVENS SHIPPING CO., INC., et al., Defendants, ESCAMBIA TREATING CO., Defendant-Appellant, v. DETCO TOWING CO., INC., Defendant-Appellee.

Nos. 78-1505, 78-1887.

United States Court of Appeals Fifth Circuit. ^*

Feb. 22, 1983.

George D. Gabel, Jr., Jacksonville, Fla., H. Edward Moore, Jr., Pensacola, Fla., for Escambia Treating Co.

Allen F. Campbell, Brunswick G. Deutsch, New Orleans, La., Albert Fendig, Jr., Brunswick, Ga., for Aetna.

Gustave R. Dubus, II, Savannah, Ga., for Detco Towing Co., Inc.

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

Before GODBOLD, Chief Judge, BROWN, CHARLES CLARK, RONEY, GEE, TJOFLAT, HILL, FAY, RUBIN, VANCE, KRAVITCH, FRANK M. JOHNSON, JR., GARZA ^**, HENDERSON, REAVLEY, POLITZ, HATCHETT, ANDERSON, RANDALL, TATE, SAM D. JOHNSON, THOMAS A. CLARK and WILLIAMS, Circuit Judges. ^***

JOHN R. BROWN, Circuit Judge:

Escambia ¹ sold approximately 4,350 telephone poles for delivery in Puerto Rico. As part of the contract, Escambia had to arrange transportation. On April 25, 1975, Escambia entered into a contract with Hercules described as a charter of the barge HERWOOD for transportation of the poles from Brunswick, Georgia to San Juan, Puerto Rico. Two days earlier, on April 23, 1975, Hercules amended a long-term contract with Detco for the towage of the barge HERWOOD. Acting for Escambia, Stevens loaded the poles aboard the barge. The barge and tug set sail. A noticeable list to port developed. Detco, acting with advice of its chosen naval experts, attempted to compensate by ballasting several tanks, but to no avail. After refueling and leaving Puerto Plata, Dominican Republic, the barge capsized on June 29, 1975, losing its cargo of poles and sustaining substantial damage to the hull. And thereby hangs this tale.

In the usual welter of complaints, cross-complaints, counterclaims and impleaders, two distinct claims are asserted. The first is the claim by Hercules for physical damage to the barge HERWOOD. The second is the claim of Aetna (Escambia's subrogated cargo underwriter) for loss of the cargo of poles.

In the first claim, Hercules lashed out against all, naming Stevens the stevedore, Detco, the tug TRACY D, and Escambia the shipper. Escambia cross-claimed against Detco and the tug TRACY D and Stevens, seeking indemnity and asserting that, if it were held liable on Hercules' claim, then legal responsibility lay on the impleaded cross-defendants, Detco, the tug, and Stevens. After first, on summary judgment, dismissing Hercules' claim against Detco for failure to bring suit within the contract one year period ² the District Court then, on summary judgment, dismissed Escambia's cross-claim for indemnity on the ground that it was also thereby time barred. This brings into question as the only enbancworthy issue the continued vitality of our decision in Grace Lines v. Central Steamship Corp., 416 F.2d 977 (5th Cir.1969), cert. denied, 398 U.S. 939, 90 S.Ct. 1843, 26 L.Ed.2d 271 (1970).

The District Court by separate orders also dismissed Aetna's claim for cargo damage. We reverse this order and the denial of Escambia's claim for indemnity.

The Escambia-Hercules Charter Party Agreement

Escambia arranged for delivery of the poles by chartering the barge HERWOOD from Hercules. ³ The parties agreed in Article IV Rates that the "rate for the use of the vessels in the movement of the cargo shall be $25.75 per short ton ..." (emphasis added) Article V incorporated Exhibit "B" entitled "Hercules Terms and Conditions Applicable to Charters", the most significant of which was paragraph 9 ⁴, extending to both Hercules and the tug the benefit of all exemption from, and limitation of, liability statutes and specifically COGSA.

The Hercules-Detco Towing Agreement

Prior to the Escambia-Hercules charter party agreement, Hercules in November 1974 had entered into a long-term towage contract with Detco. This contract was amended on April 23, 1975, to provide specific towage rates for voyages made on behalf of Escambia. The contract, as amended April 23, 1975, provided that for all trips on behalf of Escambia for cargoes of telephone poles the daily rate should be $2200 instead of $2400. It expressly provides that "Tower [Detco] agrees to perform the towage service described ..." Of greatest significance is paragraph (8), which extended to Tower and the tug, her owners, etc., all exemptions provided under limitation of liability statutes and the rights, immunities and exemptions from liability under the Carriage of Goods by Seas Act. ⁵ These incorporated statutory defenses or rights were invoked "notwithstanding that this agreement involves towage rather than the carriage of cargo ..." and the express agreement that the contract, "... shall likewise be construed as a contract for towage service and shall not be construed as a charter of the Tug or be or give rise to a personal contract." Paragraph (12) also provided a one year period of limitations for claims. ⁶

The Litigation

On May 11, 1977, almost two years after the occurrence, Hercules filed suit for damage to the barge HERWOOD against Escambia, Detco, the tug TRACY D, and Stevens, alleging that the damage to the barge was due to improper loading. Aetna, asserting its cargo claim as subrogee of Escambia, moved on July 7, 1977 to intervene, claiming that the loss of cargo was caused by the negligence of Detco, its tugs and Stevens, the stevedore. Both Detco and Stevens moved to dismiss Aetna's intervention on the basis of the one year COGSA limitation on suits as incorporated under Paragraph 9 of the charter party. 46 U.S.C. 1303(6). ⁷

On August 15, 1977 Escambia cross-claimed against Detco, the tug TRACY D and Stevens for indemnity as to the action filed by Hercules for damage to the barge HERWOOD. ⁸ Escambia subsequently filed a counterclaim against Hercules for the freight charges and a third-party complaint against Aetna for refusal to defend under a comprehensive general liability policy.

Disposition in the District Court

On September 28, 1977 the District Court granted Detco's motion to dismiss Aetna's petition of intervention. The basis for this decision was the one-year limitation provided by COGSA which was incorporated by paragraph 9 into the charter party. (See note 4, supra.)

In opposing the dismissal of its petition to intervene, Aetna urged that the agreement between Escambia and Hercules was one of towage to which COGSA did not apply. As to the Hercules/Escambia charter party, Aetna contended that Paragraph 9 (see note 4, supra ), referring to all the "rights and immunities" was an incorporation only of Sec. 4 of COGSA, 46 U.S.C. Sec. 1304, entitled "Rights and Immunities of Ships and Carrier", whereas the one-year limitation provision is found under Sec. 3 of COGSA (see note 7, supra ). From this, Aetna deduced that the charter party did not contain a sufficiently expressed statement that the parties intended to incorporate the one-year limitation. As to the towage agreement, Aetna argued that the incorporation of COGSA was an invalid and indirect method of circumventing the Bisso doctrine. ⁹ In its filed memorandum, Aetna first raised the issue that it was a third-party beneficiary to the Hercules-Detco towage contract. ¹⁰ Escambia, in its crossclaim against Detco, also indicated that it was a third-party beneficiary to this towage contract. ¹¹ In replying to Aetna's opposition to the dismissal of its intervention, Detco urged that, if the charter party did not create a one-year limitation by incorporation of COGSA, the one year provision in paragraph (12) of the towage agreement alone provided a defense to Detco since Escambia and its subrogee Aetna were barred as third party beneficiaries.

In response to Aetna's motion for reconsideration based on the fact that discovery had not yet been completed, the District Court on January 23, 1978 adhered to its dismissal of Aetna's petition to intervene. But it articulated a different rationale than that stated on September 28, 1977 since the discovery evidence raised factual issues "concerning the intent of the contracting parties in relation to the COGSA incorporation provision of the Escambia-Hercules agreement. [See note 4, supra]. Thus, the dismissal of the intervenor's petition cannot be based on that contract provision."

Instead, the Court accepted Detco's argument that Aetna, as subrogee of Escambia, was a third-party beneficiary of the Detco-Hercules towage agreement and thus bound by paragraph 12 (see note 6 supra ) of the towing contract fixing a one year limitation for claims. The Court also rejected Aetna's position that the requirement in the towing contract that all claims be brought within one year of expected delivery was exculpatory and therefore invalid under Bisso. Approximately one month after denying Aetna's motion to reconsider the dismissal of its petition for intervention, the District Court granted summary judgment in favor of Detco in the original complaint by Hercules and also on Escambia's crossclaim for indemnity. Both motions were granted on the basis of the one year limitation period in the towage agreement, see note 6 supra, Hercules being a direct party and Escambia a third-party beneficiary. ¹² Both Aetna and Escambia appealed. ¹³

Arguments on Appeal

In its appeal, Escambia argues that its claim against Detco was one for indemnity not damages, and was misconstrued by the lower court. ¹⁴ Since Escambia had not yet been found liable to Hercules for damage to the barge, its claim for indemnity had not accrued and therefore could not be barred by the one-year limitation in the towage agreement. Escambia also attacked the District Court's finding that Escambia was bound as...