Petition of Chadade Steamship Co., 65-213.

Decision Date06 April 1967
Docket NumberNo. 65-213.,65-213.
Citation266 F. Supp. 517
PartiesPetition of CHADADE STEAMSHIP CO., Inc., as owner of the S.S. YARMOUTH CASTLE, Yarmouth Cruise Lines, Inc., and Yarmouth Cruises, Inc, in a cause of exoneration from or limitation of liability, civil and maritime.
CourtU.S. District Court — Southern District of Florida

Zock, Petrie, Sheneman & Reid, New York City, and Smathers & Thompson, Miami, Fla., for petitioner.

James A. Dixon, Jr., William M. Alper, and J. B. Spence, Miami, Fla., Proctor's Committee.

MEHRTENS, District Judge.


This matter is before the Court on motion of the Proctors' Committee to require petitioner, Chadade Steamship Co., Inc., to file an additional stipulation and bond with security.

This litigation arises from the burning and sinking on November 13, 1965 of the Panamanian cruise ship, Yarmouth Castle. The Yarmouth Castle was operated out of Miami, Florida, on passenger cruises to ports in the Bahamas and return. On November 12, 1965, the vessel left Miami, Florida, for a cruise to Nassau, Bahamas and return, and in the early morning hours of November 13, 1965, the vessel burned and sank on the high seas outside the territorial waters of the United States or the Bahamas. According to the shipowner's petition, the vessel was owned by Chadade Steamship Co., Inc., a Panamanian corporation, and was registered under the laws of Panama, flying a Panamanian flag. Approximately five hundred passengers and crew were aboard the vessel, the passengers being primarily nationals of the United States, and the crew and officers citizens and residents of various foreign countries.

Chadade Steamship Co., Inc., and related corporations filed a petition for limitation of and exoneration from liability on December 8, 1965. This Court entered various orders to control the litigation, including deferment without prejudice of all preliminary motions by claimants until after the filing of claims and entry of appearance of counsel. Approximately four hundred and forty claims were filed and sixty-eight proctors entered appearances for various claimants. Thereafter this Court appointed a Proctors' Committee by stipulation of claimants and order of court with leave to proceed, on behalf of those stipulating claimants, with all motions, discovery and litigation involving the issues of limitation of and exoneration from liability.

In its original petition, the shipowner claimed the benefit of Sections 4281-4285 of the Revised Statutes of the United States or "any applicable Convention or Foreign law" relating to limitation of liability. Petitioner offered an interim stipulation for value in the sum of $33,000.00, the suggested value of the strippings of the Yarmouth Castle together with passage money, and further offered to file such stipulation or other security as the Court might fix, not to exceed $60.00 per ton. By order of this Court, the petitioning shipowner amended Paragraph 12 of its petition and, in addition to claiming the benefits of the limitation laws of the United States, pleaded in the alternative that in the event it be determined that the rights of the parties are governed and controlled by the laws of the Republic of Panama, "petitioner's claim the immunities and benefits of exoneration from or the limitation of liability provided for by the following Sections 1078, 1079 and 1093 of the Commercial Code of the Republic of Panama * * *." The Proctors' Committee then filed the motion presently before this Court for determination, alleging that the limitation proceedings herein are controlled by Articles 1078, 1093 and other relevant portions of the Commercial Code of the Republic of Panama; that the Panamanian law provides for limitation of liability of a shipowner in a marine disaster; that these provisions of the Panamanian law fix the valuation of a vessel; that they are attached to the right and are a part of the substantive law of Panama and that the stipulation and security required of the shipowner in this proceeding must be determined in accordance with the laws of Panama.

Before discussing the dispositive issues before the Court, it may be well to advert to those legal issues which are settled law or as to which there is no serious contention to the contrary by the parties. First, it is long settled that Chadade Steamship Co., Inc., as a Panamanian corporation and as owner of a Panamanian flag vessel involved in a marine disaster, has the right to litigate its limitation of liability, if any, in this Court, nor does the Proctors' Committee contend to the contrary. National Steam Navigation Co. v. Dyer (The Scotland), 105 U.S. 24, 26 L.Ed. 1001, 46 U.S.C. Sec. 183. Second, on the high seas the law of the flag of a vessel generally governs not only criminal conduct but also the substantive rights of crew, passengers and the shipowner in civil causes of action arising thereon. Lauritzen v. Larsen, 345 U.S. 571, 583-585, 73 S.Ct. 921, 97 L.Ed. 1254; Oceanic Steam Navigation Co., Ltd. v. Mellor (The Titanic), 233 U.S. 718, 732, 34 S.Ct. 754, 58 L.Ed. 1171; Old Dominion Steamship Co. v. Gilmore (The Hamilton), 207 U.S. 398, 403, 28 S.Ct. 133, 52 L.Ed. 264; United States v. Rodgers, 150 U.S. 249, 260, 264, 14 S.Ct. 109, 37 L.Ed. 1071; Ozanic v. United States (The Petar), 2d Cir., 165 F.2d 738, 743; United States Shipping Board Emergency Fleet Corp. v. Greenwald, 2d Cir., 16 F.2d 948, 950.

In the absence of some overriding public policy to the contrary, the right to recover for a tort or other personal cause of action depends upon and is measured by the law of the foreign country where the cause of action arose. Cuba Railroad Co. v. Crosby, 222 U.S. 473, 32 S.Ct. 132, 56 L.Ed. 274; Slater v. Mexican National Railway Co., 194 U.S. 120, 24 S.Ct. 581, 48 L.Ed. 900; Oceanic Steam Navigation Co., Ltd. v. Mellor, supra. The petitioning shipowner, however, urges not only the absolute right to litigate limitation of liability in the United States, but also that the amount of the shipowner's stipulation for value is purely procedural under local limitation statutes and petitioner's bond should be determined by the laws of the forum. Oceanic Steam Navigation Co. v. Mellor (The Titanic), supra.

In The Titanic, a British vessel collided with an iceberg on the high seas and sank with a multiple loss of life. The shipowner filed a petition to limit liability in the United States claiming the benefit of the United States limitation statutes. Mellor, a British national, filed exceptions to the petition asserting that the forum's limitation statutes cannot apply to a disaster occurring on the high seas on a British flag vessel. The trial court dismissed the petition as to Mellor. On appeal, the Court of Appeals certified three questions to the Supreme Court for answer as follows: (1) whether under these facts and where there is nothing before the Court to show what, if any, is the law of a foreign country to which the vessel belongs touching the owner's liability for such disaster, the owner can proceed in a United States Court under United States limitation statutes; (2) whether the shipowner can proceed under the United States statutes in that country even though the foreign country makes provision for limitation of liability; and (3) whether, in a limitation proceeding under United States statutes, the Court will enforce the law of the United States or of the foreign country with respect to the limit amount of the owner's liability. The Supreme Court held that a foreign shipowner may avail itself of United States courts and proceed under the limitation laws of the United States in a single vessel disaster occurring on the high seas. The Court observed that it was dealing with "a liability assumed already to exist on other grounds." It held that the United States statute on valuation was procedural and, in the absence of proof to the contrary, assumed that the English law of limitation was likewise procedural. It then held, purely as an exercise in comparing conflicting procedural rules of two jurisdictions, that the procedural rules of the lex fori, the United States, would control the amount of the bond, if any, that would be required of the shipowner in order to maintain its limitation action in the United States courts. The Titanic became, and still is, sound authority for that proposition.

Black Diamond Steamship Corp. v. Robert Stewart & Sons, Ltd. (The Norwalk Victory), 336 U.S. 386, 69 S.Ct. 622, 93 L.Ed. 754, posed a different aspect of the problem. In that case, the Norwalk Victory, an American vessel, collided with a British vessel, the Merganser, in the Schelde River within territorial waters of Belgium and struck and damaged the river bank. The owners of the Norwalk Victory filed a petition to limit liability in the United States. Admitting that the value of the vessel was about $1,000,000.00, the shipowner insisted that its stipulation and bond was controlled by the substantive law of Belgium (The International Convention at Brussels of 1924, also called The Brussels Convention), and under that law, posted a bond of approximately $325,000.00. The District Court, holding that the amount of the bond was procedural, controlled by United States law (as in The Titanic), found that the bond should have been in the amount of $1,000,000.00 and dismissed the petition for limitation.

The issue presently before this Court was described by Mr. Justice Frankfurter, as follows, 336 U.S. 394, 395, 69 S.Ct. 627:

"Having decided that the case must be remanded because the petition was improperly dismissed, we turn to the question whether there are any circumstances under which the Belgian limitation would be enforceable by our courts. On this point we agree with the Court of Appeals—and disagree with the District Courtthat if, indeed, the Belgian limitation attaches to the right, then nothing in The Titanic, 233 U.S. 718, 34 S.Ct. 754, 58 L.Ed. 1171,

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