Pershing Auto Rentals, Inc. v. Gaffney

• Decision Date: 15 June 1960
• Docket Number: No. 18075.,18075.
• Parties: PERSHING AUTO RENTALS, INC., Appellant, v. William C. GAFFNEY et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

279 F.2d 546 (1960)

PERSHING AUTO RENTALS, INC., Appellant, v. William C. GAFFNEY et al., Appellees.

No. 18075.

United States Court of Appeals Fifth Circuit.

June 15, 1960.

David S. Batcheller, James L. Armstrong, III, David W. Dyer, Miami, Fla., for appellant; Smathers, Thompson & Dyer, Miami, Fla., of counsel.

Sam Daniels, Herbert L. Nadeau, Miami, Fla., for appellees.

Before HUTCHESON, BROWN and WISDOM, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

It has taken 109 years for this case to materialize. For the first time in this long continuance of the Act concerning limitation of shipowner's liability¹ which, for our purposes, remains the same as originally enacted in 1851, a simple question is posed. In a multiple-claim-inadequate-fund limitation proceeding may the admiralty court modify its traditional injunction to permit some of the claimants to establish their claims initially in a state common law court?

Before we get to that we must take notice of a possible lack of jurisdiction. The order under review did not decide a petition for limitation of liability, nor was it an appealable interlocutory order "determining the rights and liabilities of the parties to admiralty cases." 28 U.S.C.A. § 1292(a) (3). It was simply an order modifying the injunction previously entered to permit two of the four claimants to proceed with trial of their state court suits for the injuries growing out of this marine casualty. We do not have to decide whether this is an occasion for the exercise of our undoubted right and duty to reexamine a former decision when its correctness has been brought sharply into question. River Terminals Corp. v. Southwestern Sugar & Molasses Co., 5 Cir., 1958, 253 F.2d 922 at pages 924-925, 1958 A.M.C. 1534, 1536, 1959, 360 U.S. 411, 79 S.Ct. 1210, 3 L.Ed.2d 1334, 1959 A.M.C. 1631; 5 Cir., 1960, 274 F.2d 36. Nor need we undertake to see whether there may be some distinguishing factors. For accepting our prior decisions, Stark v. Texas Company, 5 Cir., 1937, 88 F.2d 182, 183, 1937 A.M.C. 558, 559; Postal S.S. Co. v. International Freighting Corp., 5 Cir., 1943, 133 F.2d 10, 1943 A.M.C. 275, as holding to the contrary, we think that Lake Tankers Corp. v. Henn, 1957, 354 U.S. 147, 77 S.Ct. 1269, 1 L.Ed.2d 1246, 1957 A.M.C. 1165, in this context at least, requires that we no longer adhere to them. While the point was not there specifically urged, Henn was a review of a decision of the Second Circuit² of the very type of modification of the limitation of liability injunction which that Circuit had consistently held³ was appealable as the granting, refusal, or modification of an injunction under 28 U.S.C.A. § 1292(a) (1). As appealability of interlocutory orders is a matter of almost allergical sensitiveness to all appellate courts, the action of the Supreme Court in its authoritative discussion of the substantive merits of this limitation of shipowner's liability procedural problem argues convincingly that that Court regards orders of this kind appealable. We must, therefore, treat the merits.

The petition for exoneration from and limitation of liability was filed by petitioner as owner of the 26-foot M/V Pershing. On September 28, 1957, the boat was laying in a public dock in Dade County, Florida, and while the four claimants were aboard apparently doing some work on the engine — whether authorized or not is highly disputed — she exploded, became a total loss and injured several persons severely. An ad interim stipulation for $500 was filed, representing a most liberal appraisal of her value. As has each judge to whom like sheaves of papers have come ex parte, the District Judge in the tradition of the admiralty signed three orders where one would have done.⁴ Of most importance was the usual order which stayed and restrained institution or prosecution of any other suits pending hearing and determination of the limitation proceeding.

Within the prescribed time claims and answers were filed by four claimants through two sets of proctors for a grand total of $558,000.⁵ It is an understatement to remark that the claims and answers of each disputed most vigorously the petition's basic allegations of absence of neglect or fault and, more important, the lack of privity on petitioner's part.

Nearly two years later, two of the claimants, Stein and Smithline, note 5, supra, through their proctors moved for a modification of the injunction, note 4, supra, to permit those claimants to proceed further with their actions then pending in the Florida state court against petitioner as well as other undisclosed defendants. The proposed protective stipulation was indeed a vague one⁶ and apparently was so considered by the District Judge. For in his order which "modified the original injunction as to said claimants * * * only to said extent," the Court spelled out further conditions⁷ to which these two claimants would have to subscribe (and later did) notwithstanding these still left much to be desired.

We would have considerable doubt that the stipulation prescribed in the Court's order modifying the injunction, see note 7, supra, was adequate.⁸ And accepting to the fullest extent the most favorable implication of the decisions of the Second Circuit in this field, we would likewise doubt that some, but less than all, of the claimants can attempt to stipulate where, as here, the remaining claims themselves greatly exceed the limitation fund.⁹ On these points, we might reverse without more. But we think that in the interest of orderly administration to advance the trial of the limitation proceeding which is so inevitable, we should determine this on its substantive correctness, not possible procedural imperfections.

If an admiralty court in a multiple-claims-inadequate-fund case may permit the claimants first to try the issue of liability vel non and damages in every claim in court actions outside of the limitation proceeding during which time the limitation case will be in a suspensive state of limbo, there will be little, if anything, left of the statutory scheme created by Congress and implemented by Admiralty Rules contemplated in the statute. Because this is about all that is left now. No longer the occasion for lamentations, Langnes v. Green, note 8, supra, permits the claimant in a single claim situation after appropriate protective stipulations to proceed elsewhere reserving exclusive final determination of the right to limitation (and amount of the fund) to the admiralty court. Likewise, in multiple-claim situation where the total of all of the claims does not exceed the limitation fund, any or all of the claimants may under suitable stipulation litigate elsewhere. All that is left, then, is the case of multiple claims which exceed the limitation fund¹⁰ and in which the right to limit is disputed.

If in this multiple-claim-inadequate-fund situation the admiralty court may do so where there are four claims growing out of the destruction of a motorboat, it would be equally free to do so when faced with an Andrea Doria-Stockholm collision or like spectacular maritime catastrophe. Reminiscent of these would be the Morro Castle, the occurrence of which has considerable relevance. Although it aroused intense public and governmental interest in the field of legal liabilities for seagoing disasters leading to the 1935-1936 Amendments concerning the time for commencement of limitation proceedings, the amount available for certain types of claims and a broadening of privity and knowledge as to certain actions, no effort was made by Congress to tamper with the traditional format of all of the claims being determined in a single proceeding.¹¹

In behalf of such a startling result, the claimants urge only that the notion of a concursus — on the analogy of an equitable bill to avoid multiplicity of suits — so often stressed in earlier opinions of the Supreme Court has now lost much favor. But granting the correctness of this approach, as does the approval in Lake Tankers Corp. v. Henn, 1957, 354 U.S. 147, 77 S.Ct. 1269, 1 L.Ed.2d 1246, 1957 A.M.C. 1165, of this critical analysis by the Second Circuit of the purpose of the limitation of liability act, there is nothing in this thesis that remotely suggests that an admiralty court may send the claimants elsewhere when the multiple claims exceed the fund. On the contrary, the idea expressed in these many cases from the Second Circuit¹² is that a concourse is needed precisely when the claims either exceed the fund or there is an arguably reasonable apprehension that they will.

That Court made this plain on several occasions. "We have several times announced the principles which we think must apply here: Absent an insufficient fund (1) the statutory privilege of limiting liability is not in the nature of a forum non conveniens doctrine, and (2) the statute gives a ship-owner, sued in several suits * * * no advantage over other kinds of defendants in the same position. Concourse is to be granted `only when * * * necessary in order to distribute an inadequate fund.' The `purpose of limitation proceedings is not to prevent a multiplicity of suits but, in an equitable fashion, to provide a marshalling of assets — the distribution pro rata of an inadequate fund among claimants, none of whom can be paid in full.'" Petition of Texas Co., supra, 2 Cir., 213 F.2d 479, at page 482, 1954 A.M.C. 1251 at 1255. This was shortly spelled out in even plainer terms. "It is, of course, true that in limitation cases in which the sum total of the damages * * * may exceed the fund available for the payment of claims, the concourse of all claimants in the limitation proceeding is a technique indispensable to the statutory objective, viz., a marshalling of claims. * * * In such cases * * * the concourse will not be disturbed * * *." Petition of Trinidad Corp., supra, 229 F.2d 423, at page 428, 1956 A.M.C. 872 at pages 875-876. And the Court In re Wood's Petition, 2 Cir., 1956, 230...