KONINKLYKE NEDERLANDSCHE, ETC. v. Strachan Shipping Co., 19181.

• Decision Date: 20 June 1962
• Docket Number: No. 19181.,19181.
• Citation: 304 F.2d 545
• Parties: KONINKLYKE NEDERLANDSCHE STOOMBOOT MAALSCHAPPY, N.V., ROYAL NETHERLANDS STEAMSHIP COMPANY, Appellant, v. STRACHAN SHIPPING CO., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

304 F.2d 545 (1962)

KONINKLYKE NEDERLANDSCHE STOOMBOOT MAALSCHAPPY, N.V., ROYAL NETHERLANDS STEAMSHIP COMPANY, Appellant, v. STRACHAN SHIPPING CO., Appellee.

No. 19181.

United States Court of Appeals Fifth Circuit.

June 20, 1962.

Clarence S. Eastham, Houston, Tex., William M. Kimball, Burlingham, Hupper & Kennedy, New York City, Eastham, Watson, Dale & Forney, Houston, Tex., for appellant.

Henry D. Akin, Dallas, Tex., E. D. Vickery, Royston, Rayzor & Cook, Houston, Tex., Leachman, Gardere, Akin & Porter, Dallas, Tex., of counsel, for appellee.

Before RIVES, CAMERON and GEWIN, Circuit Judges.

RIVES, Circuit Judge.

The appellee Strachan Shipping Co. insists that our decision is irreconcilably in conflict with Kent v. Shell Oil Co., 5 Cir., 1961, 286 F.2d 746, thus:

"In Kent a recovery based on a `federal judicially-established maritime contractual warranty\' was prevented by a state compensation act, while the majority in this case holds that a recovery based on a `federal judicially-established maritime contractual warranty\' cannot be prevented by a state compensation act."

It should be pointed out first, that if there is a conflict, it is not a direct one. The present issue of a third party indemnity against the employer of the injured party was not, and indeed could not have been, reached in Kent since the injured party was not allowed to proceed to judgment against the third party. Further, the primary ground for decision in Kent was that no maritime issue was presented since the injury was land based and nonmaritime in character. As an added ground for decision, the Court held that even if an unseaworthiness claim were established, it also could be cut off by the Louisiana Compensation Act, LSA-R.S. 23:1032, 23:1061. Thus the appellee has a considerable burden in attempting to construct an irreconcilable conflict.

In stating the conflict quoted above the appellee appears to be arguing two separate theories: 1) that the right of the injured party to sue on an unseaworthiness claim is based upon a "federal judicially-established maritime contractual warranty" which Kent held could be cut off by state law — ergo, why cannot the warranty sued on by Royal be controlled by Texas; and 2) since Texas may control all the rights and liabilities to the contract of employment between the injured party and his employer, it is inconsistent to deny it control over the liability of the employer to a third party growing out of the employee's claim.

In arguing that unseaworthiness is based upon a contractual warranty, the appellee misconstrues the law to a certain extent to aid the creation of its irreconcilable conflict. In Seas Shipping Co. v. Sieracki, 1946, 328 U.S. 85, 66 S. Ct. 872, 90 L.Ed. 1099, the Supreme Court dealt with this issue in refuting the allegation that unseaworthiness requires a contractual relationship between the injured party and the shipowner. The Court held that the doctrine was not limited to the narrow confines of contract but was an incident to "performing the ship's service with the owner's consent," 328 U.S. at 92-97, 66 S.Ct. at 876, 878, which could not be delegated or contracted away, id. at 100, 66 S.Ct. at 880.

Under either of the appellee's theories, however, the problem is essentially the same: whether the acknowledged efficacy of the Texas compensation act to control the rights and liabilities between the injured party and his employer extends to control over the independent rights of the vessel owner on the stevedoring contract. While the appellee argues that Kent decided this issue, the very language relied upon shows that the Court there went no further than the question of the employee's rights.¹ The issue of the vessel owner's rights is of first impression here and stands or falls on analysis of the rights asserted.

The heart of the appellee's argument is that Royal's indemnity is derivative from and based upon the injured employee's rights, and since West Texas Utilities Co. v. Renner, Tex.Com.App., 53 S.W.2d 451, holds that the Texas Compensation Act bars an action attempting to compel the employer to pay "indirectly when no liability existed to pay directly," no indemnity will lie. The word "indirectly," however, relates to the nature of the third party's cause of action, and not to the mere fact that the amount recovered by the injured party may eventually be paid by his employer. The distinction is made clear by the dissent in Ryan Stevedoring Co. v. Pan Atlantic Co., 1956, 350 U.S. 124, 135, 76 S.Ct. 232, 100 L.Ed. 133, upon which the appellee relies in its brief on motion for rehearing. There Justice Black argues not that a contract warranty is an "indirect" recovery against the employer or a recovery "on account of" the injury to the longshoreman, but that no such contract warranty should be implied.² The Justice concedes that having found the contract action, a new and independent action exists not barred by the federal compensation act. 350 U.S. at 141, 76 S.Ct. 241. This same analysis has been applied by other courts in allowing an indemnity in spite of similar language in their state compensation acts. Thus in Westchester Lighting Co. v. Westchester County Small Estates Corp., 1938, 278 N.Y....