In re United States Steel Products Co.

• Decision Date: 05 March 1928
• Docket Number: No. 108.,108.
• Citation: 24 F.2d 657
• Parties: In re UNITED STATES STEEL PRODUCTS CO.
• Court: U.S. Court of Appeals — Second Circuit

24 F.2d 657 (1928)

In re UNITED STATES STEEL PRODUCTS CO.

No. 108.

Circuit Court of Appeals, Second Circuit.

March 5, 1928.

Haight, Smith, Griffin & Deming, of New York City (John W. Griffin, of New York City, of counsel), for U. S. Steel Products Co.

Bigham, Englar & Jones, of New York City (Leonard J. Matteson, of New York City, of counsel), for California Packing Corporation and others, intervener appellants.

Charles H. Tuttle, U. S. Atty., of New York City (Horace M. Gray, Sp. Asst. U. S. Atty., of New York City, of counsel), for appellee.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

MANTON, Circuit Judge.

On February 26, 1921, the steamship Steel Inventor, owned by the United States Steel Products Company, and the United States destroyer Woolsey, collided off the Panama coast in the Pacific Ocean. The Woolsey was sunk and became a total loss. The Inventor was damaged and her cargo sustained serious losses.

The United States Steel Products Company filed a petition for the limitation of liability and the usual stipulation to pay into court the amount of its interest in the vessel and pending freight, and it asked to be exonerated from all fault. The United States filed its answer and filed a claim for $1,500,000 by reason of the loss of the Woolsey. In the answer it contested the claims to both exoneration and limitation of liability and prayed for a decree in its favor as claimant for the amount of its damages. It asked "that a decree may be entered in favor of this claimant and against the petitioner for the amount of damages sustained by this claimant as set forth in its claim filed herein, with interest and costs." After a trial, the District Court entered an interlocutory decree granting such limitation of liability, and further decreed that the United States recover one-half of its damages due to the collision, less one-half of the petitioner's, the United States Steel Products Company.

The appellants, cargo holders on the Steel Inventor, have petitioned to intervene as claimants. They argue that, while no award has as yet been made by the master appointed to fix damages to be awarded to the United States, it is certain that an award will be made in a very large sum. They invoke the principle that since the United States has come into court to enforce a claim, it has taken the position of a private suitor, and must agree that justice be done with regard to the subject-matter, and all just claims must be recognized in the interests of justice, even though, but for their appearance, such claims might not otherwise be enforced. Since both vessels have been held at fault, they argue, the cargo owners have claims against the Woolsey, even though they were incapable of enforcing them against the United States by direct libel. What will be recovered for the United States by the aid of the court is a substitute for the Woolsey. It, by the action of the United States, has been placed within the jurisdiction and control of the court. The argument then proceeds that, by implication, it must agree that just claims against the Woolsey should first be paid out of the sum awarded. In the court below, the intervening petitions were filed, exceptions were interposed and sustained, and the petitions dismissed.

Since both vessels were held at fault, if the Woolsey were a privately owned ship, she would be responsible in full to the cargo owners of the Steel Inventor, with due regard for the provisions of the Harter Act (46 USCA §§ 190-195; Comp. St. §§ 8029-8035). The Atlas, 93 U. S. 302, 23 L. Ed. 863. The colliding vessel may recoup one-half of the amount from one-half of the amount of damages to the carrying vessel. The Chattahoochee, 173 U. S. 540, 19 S. Ct. 491, 43 L. Ed. 801. If both were privately owned, intervention by these cargo owners was a proper remedy. Andrews v. Wall, 3 How. (44 U. S.) 568, 11 L. Ed. 729; The Nahor (D. C.) 9 F. 213. In the Nahor Case, supra, Choate, J., emphasized that a petition to intervene is the only procedure open to cargo owners.

The sum awarded or to be awarded as the value of the Woolsey is the res and is a substitute for the vessel. O'Brien v. Miller, 168 U. S. 287, 18 S. Ct. 140, 42 L. Ed. 469; Sheppard v. Taylor, 5 Pet. 675, 8 L. Ed. 269. Before such a res should be paid out to the United States, just claims against it must be paid. United States v. The Thekla, 266 U. S. 328, 45 S. Ct. 112, 69 L. Ed. 313; The Siren, 7 Wall. 152, 19 L. Ed. 129. Such claims would include those related to the subject-matter of the litigation. In the Thekla Case, supra, the original bill was filed by the Luckenbach Steamship Company against the bark Thekla, and a cross-libel was filed by the owners of the Thekla. The United States was made a party on its own motion and rested on the steamship company's libel. At the trial, it was found that the ship was under requisition charter to the United States at the time of the collision and that the steamship alone was at fault. A decree was entered for the claimant, and, on certification of questions to the Supreme Court, the court said: "When the United States comes into court to assert a claim it so far takes the position of a private suitor as to agree by implication that justice may be done with regard to the subject-matter. The absence of legal liability, in a case where but for its sovereignty it would be liable, does not destroy the justice of the claim against it."

The claim asserted by the United States here was a right of suit in admiralty against the Steel Inventor. In doing so, it did take the position of a private suitor, and asked that justice be done regarding the subject-matter, which was the collision. The Western Maid, 257 U. S. 419, 42 S. Ct. 159, 66 L. Ed. 299; The Thekla, supra. If, with a private litigant, the recovery would be a substitute for the vessel (O'Brien v. Miller, supra), and the res thus created is subject to the maritime lien of the cargo damaged (Sheppard v. Taylor, supra), the recovery of the United States should be dealt with with full regard for the maritime liens of the appellants. In The Thekla, supra, the court said:

"The doubt in this case arises not from the absence of a maritime lien, but from the fact that the counterclaim is not against the Thekla libeled by the United States, but for affirmative relief against a different vessel. * * * But we are of opinion that this is to construe the submission of the United States too narrowly. * * * If both parties were in fault the entire damage would be divided equally between them, and it could not be argued that the United States could avoid the consequences of the rule although the damage to the other vessel might bar its recovering anything. This shows that the subject-matter is the collision, rather than the vessel first libeled. Bowker v. United States, 186 U. S. 135, 139 22 S. Ct. 802, 46 L. Ed. 1090. The libel in such a case is like a bill for an account, which imports an offer to pay the balance if it should turn out against the party bringing the bill. * * * The reasons that have prevailed against creating a government liability in tort do not apply to a case like this, and on the other hand the reasons are strong for not obstructing the application of natural justice against the government by technical formulas when justice can be done without endangering any public interest."

Since the subject-matter of the suit is the collision and the damages which the interveners allege were caused by the collision, it follows that their intervention should prevail. The proceeds or the res thus created is in control of the court and is a part of the subject-matter (that is, the collision), and the United States must be deemed to have waived this immunity under the reasoning of the Thekla decision.

The United States argues that the right of intervention in this litigation depends upon the existence of an interest in a fund in court which the interveners wish to protect, and, since the interveners must admit they have no legal claims against the Steel Inventor, the source of the fund, they may not prevail. But this argument overlooks the fact that it is not the value of the Steel Inventor, but the damage done to that part of its whole — the cargo — which is limited by limitation to the value of the Steel Inventor. The source of...