Petition of Trinidad Corporation, 257

• Citation: 229 F.2d 423
• Decision Date: 28 December 1955
• Docket Number: Docket 23478.,No. 257,257
• Parties: Petition of TRINIDAD CORPORATION, Petitioner-Appellant, as owner of THE Tank Steamship FORT MERCER, for Exoneration from or Limitation of Liability. Raymond S. Rodriquez et al., and Earl T. Smith, Claimants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

229 F.2d 423 (1955)

Petition of TRINIDAD CORPORATION, Petitioner-Appellant, as owner of THE Tank Steamship FORT MERCER, for Exoneration from or Limitation of Liability Raymond S. Rodriquez et al., and Earl T. Smith, Claimants-Appellees.

No. 257, Docket 23478.

United States Court of Appeals Second Circuit.

Argued March 7, 1955.

Decided December 28, 1955.

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Burlingham, Hupper & Kennedy, New York City, Eugene Underwood, Elliott B. Nixon, Jr., of counsel, for petitioner-appellant.

Shafter & Shafter, New York City, for claimants-appellees Raymond S. Rodriquez, and others.

Klein & Ruderman, New York City, for claimant-appellee Earl T. Smith. Edwin M. Bourke, New York City, Advocate.

Before MEDINA and HINCKS, Circuit Judges, and BURKE, District Judge.

HINCKS, Circuit Judge.

On February 18, 1952, in rough water off Cape Cod, while on a voyage from Louisiana to Maine, the petitioner's tank steamship Fort Mercer broke in two. Of the nine men on the forward section of the vessel, five lost their lives. Four men on the forward section and twenty-one men on the stern section were rescued the following day and all other survivors remained on the stern section until it was towed to port. Three actions in behalf of twenty surviving members of the crew were brought in the United States District Court for the Southern District of New York under the Jones Act to recover damages for personal injuries allegedly sustained in an aggregate amount of $2,680,000. Of these actions, one was in behalf of Rodriquez and eighteen other members of the crew on their respective claims; another was in behalf of the claimant Smith.

Thereafter, on July 31, 1952, the petitioner filed, also in the District Court for the Southern District of New York, a verified petition for limitation in the usual form and offered an ad interim stipulation, duly supported by affidavits, in the sum of $564,007.65 which was alleged to be not less than the aggregate value of the salved section of the vessel plus pending freight. On the same day, the court ordered the filing of the proffered stipulation, issued its monition requiring that all claims be filed on or before September 9, 1952, and entered the usual order restraining the beginning and continued prosecution of claims elsewhere than in the limitation proceedings. Thereafter, some 38 claims, including those of the plaintiffs in the actions at law, were filed in the limitation proceedings in the aggregate amount of $4,435,000, together with answers in which the claimants denied petitioner's right to a limitation of liability. Of these claims, the petitioner without order of court settled twelve for an aggregate amount of $119,443 which was substantially less than the aggregate damages originally claimed thereon.

Thereafter, on September 13, 1954, a motion was noticed in behalf of the plaintiffs in the Rodriquez and Smith actions to modify the restraining order to permit prosecution of those actions at law. The motion was supported by a stipulation purporting to reduce the respective amounts of the claims of those plaintiffs to figures such that the aggregate amount of all outstanding claims was reduced to $442,000. These figures, however, did not include any claims in behalf of nine other members of the crew who prior to September 13, 1954 had filed no claims.

The stipulation referred to recited: "The amount of each claim, reduced as stated above, will never be increased. No judgment or decree will be entered in any court in excess of any of the amounts set forth herein. Any claim of res judicata relevant to the issue of limitation of liability, based on a judgment or decree in any other court, is hereby waived." It was signed only by proctors for the claimants whose claims it purported to reduce. It was proffered as an exhibit annexed to the affidavit of Jacob Rassner, Esq., made in support of the motion to modify. In his affidavit Mr. Rassner recited that "he is of counsel for" the proctors for "Rodriquez and numerous other claimants in this proceeding" who have filed a civil action in this Court against petitioner Trinidad Corporation (Civ. 73-73). At the suggestion of the court a supplemental affidavit was later filed by Smith's attorney in charge of the prosecution of Civ. 75-152 reciting that "in connection with the motion" to modify the injunction Rodriquez' proctor "was authorized to act" for Smith's attorney "in so far as such application was concerned." There was no showing that any claimant either orally or in writing had expressly authorized a reduction of his claim as filed. And neither Mr. Rassner, as "counsel" to claimants' proctors, nor any proctor for any claimant expressly represented by writing or otherwise that he had authority to reduce the amount of a client's claim.

On November 5, 1954, Judge Clancy ordered, without condition or reservation, that the restraining order be modified "to permit the prosecution against the petitioner herein of two civil actions now pending in this court" identified as Civ. 74-73 and Civ. 75-152. From that order, the petitioner prosecutes this appeal.

Judge Clancy's memorandum decision shows that his action was predicated upon a prior decision of this court in Petition of Texas Co. (The Washington), 2 Cir., 213 F.2d 479, certiorari denied, Texas Co. v. U. S., 348 U.S. 829, 75 S.Ct. 52. That was a limitation case in which the claims filed, after the amount thereof had been reduced by stipulation, aggregated less by $350,000 than the fund in court. On motions by claimants so to modify the injunction as to permit the prosecution of their claims in other forums, this court held that the court below, while retaining jurisdiction of the limitation proceedings, properly lifted the restraint and thereby permitted the prosecution of the claims elsewhere in forums of the claimants' choice.

The appellant, in a powerful argument, has asked us to re-examine the Texas Company holding. It asserts that in a limitation proceeding involving multiple claims "the heart of this system is a concursus of all claims to ensure the prompt and economical disposition of controversies in which there are often a multitude of claimants," citing Maryland Casualty Co. v. Cushing, 347 U.S. 409, 74 S.Ct. 608, 98 L.Ed. 806. It stresses the pertinence of the following passage from the opinion in Hartford Accident & Indemnity Co. v. Southern Pacific Co., 273 U.S. 207, 47 S.Ct. 357, 359, 71 L.Ed. 612:

"The proceeding partakes in a way of the features of a bill to enjoin a multiplicity of suits, a bill in the nature of an interpleader, and a creditor\'s bill. It looks to a complete and just disposition of a many-cornered controversy, and is applicable to proceedings in rem against the ship, as well as to proceedings in personam against the owner; the limitation extending to the owner\'s property as well as to his person."

And appellant further cites Butler v. Boston & Savannah Steamship Co., 130 U.S. 527, 9 S.Ct. 612, 32 L.Ed. 1017; Providence & N. Y. S. S. Co. v. Hill Mfg. Co., 109 U.S. 578, 3 S.Ct. 379, 617, 27 L.Ed. 1038; The Scotland, 105 U.S. 24, 33, 26 L.Ed. 1001; Ex parte Slayton, 105 U.S. 451, 452, 26 L.Ed. 1066; and Just v. Chambers, 312 U.S. 383, 385-386, 668, 61 S.Ct. 687, 85 L.Ed. 903. It suggests that this court in deciding the Texas Company case may have overlooked these decisions. But in none of those decisions was there a consideration of the question presently raised, i. e., whether when the fund in court is adequate for payment in full of all the claims, the court should exercise its jurisdiction to effectuate and maintain a concourse.

It is, of course, true that in limitation cases in which the sum total of the damages as liquidated 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. For in such a case, each claimant has an interest not only to enhance his own damages but also to hold to a minimum the damages allowed on competing claims: the greater the damages proved for a competing claim the less will be the proportionate share of the fund actually payable to another claimant under 46 U.S.C.A. § 184. In that situation, it is a matter of indifference to the owner how one claimant fares, vis-a-vis another. This feature explains the description, in Hartford Accident & Indemnity Co. v. Southern Pacific Co., supra, of such a proceeding as "a many-cornered controversy". In such cases, on the issues of the owner's liability and of its right to a limitation, the claimants have a common interest based largely on the same facts: but on the issue of their respective damages their interests are competing. The concourse is the statutory technique for the determination of these common and competing interests. In such cases, therefore, the concourse will not be disturbed — not even at the instance of the shipowner, as we held in The Quarrington Court, 2 Cir., 102 F.2d 916.

However, in cases in which the fund exceeds the total amount of damages which may be awarded, the "many cornered controversy" does not exist. On the one hand, the owner's right to a limitation becomes moot and, on the other hand, no occasion for a marshalling arises and the concourse is not necessary to protect one claimant from excessive claims by competing claimants. In such cases, this court has held that the limitation statute carries no power to enforce a concourse, thereby depriving claimants of a choice of forum otherwise available. The Aquitania, D.C., 14 F.2d 456, affirmed 2 Cir., 20 F.2d 457; Curtis Bay Towing Co. v. Tug Kevin Moran, Inc., 2 Cir., 159 F.2d 273; and Petition of Moran Transportation Corp., 2 Cir., 185 F.2d 386. The holding of Petition of Texas Company is no more than a logical development of that doctrine: it recognizes that, when application is made to relax a concourse...