Steuart Investment Co. v. Bauer Dredging Const. Co.

• Decision Date: 12 March 1971
• Docket Number: Civ. A. No. 70-700-N.
• Citation: 323 F. Supp. 907
• Parties: STEUART INVESTMENT COMPANY and Steuart Petroleum Company, Bodies Corporate, v. BAUER DREDGING CONSTRUCTION CO., Inc., a body corporate, and TUG ADOLPH MALCHAR, her engines, apparel, tackle and furniture, and Barge FUEL BARGE #640, her apparel, tackle and furniture.
• Court: U.S. District Court — District of Maryland

323 F. Supp. 907

STEUART INVESTMENT COMPANY and Steuart Petroleum Company, Bodies Corporate,

v.

BAUER DREDGING CONSTRUCTION CO., Inc., a body corporate, and TUG ADOLPH MALCHAR, her engines, apparel, tackle and furniture, and Barge FUEL BARGE #640, her apparel, tackle and furniture.

Civ. A. No. 70-700-N.

United States District Court, D. Maryland.

March 12, 1971.

W. B. Ewers, Baltimore, Md., for plaintiffs.

Alva P. Weaver, III, Baltimore, Md., for defendants.

NORTHROP, Chief Judge.

This is a case under Admiralty and Maritime jurisdiction concerning the Bauer Dredging Construction Co., Inc., a Texas corporation, and the Steuart Petroleum Company and Steuart Investment Company, both Delaware corporations. Plaintiffs have moved to strike an affirmative defense raising the applicability of 46 U.S.C. §§ 183-189 limiting an owner's liability in a ship collision case to the value of the vessel involved.

The facts are not in dispute. Briefly stated they are as follows: The vessel "Fuel Barge #640" while under the tow and command of the tug "Adolph Malchar", tied up to the Piney Point Pier at Piney Point, St. Mary's County, Maryland, to purchase fuel oil from the plaintiff, Steuart Petroleum Company. Both vessels were owned by the defendant. The pier was owned by the plaintiff, Steuart Investment Company but was leased to the plaintiff, Steuart Petroleum Company, a wholly owned subsidiary. "Fuel Barge #640" finished loading its cargo sometime during the evening of January 20, 1970. The barge departed shortly after the loading under the tow of the "Adolph Malchar" to deliver the fuel oil to defendant's dredge located near Piney Point. While enroute a storm erupted forcing the barge and tug to return to the pier and dock. In the early morning hours of January 21, 1970, the fuel barge collided with the pier causing substantial damage. Plaintiffs allege the accident was caused by the unseaworthiness, negligence, fault and carelessness of the "Adolph Malchar" and the "Fuel Barge #640" and those in charge of them. Defendant denies these allegations and asserts that the casualty complained of was the result of an "Act of God" which forced the barge to break her moorings, parting her lines and thus damaging the pier.

Plaintiffs contend damage to the pier amounted to One hundred and twenty-five thousand ($125,000) Dollars, which figure the defendant disputes. Defendant by way of affirmative defense petitions this court to limit its liability to the value of the barge, reportedly $25,000, and at most, the additional value of the tug, reportedly $20,000. In addition, the value of the fuel on board was alleged to be $5,750. Plaintiffs contend the defendant cannot avail itself of this defense and urge this court to strike, alleging the existence of a personal contract between the defendant and plaintiffs. In the alternative, plaintiffs seek the inclusion of the additional value of both the tug and dredge in the petition for limitations.

At the outset, a party may move to strike under Rule 12(f) any "insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." A motion to strike, however, is not favored and will be denied unless the allegations attacked have no possible relation to the controversy and may prejudice the other party. Brown & Williamson Tobacco Corp. v. United States, 201 F.2d 819 (6th Cir. 1953); Jones v. Thunderbird Transp. Co., 178 F.Supp. 9 (D.Kan.1959); Thompson v. United Artists Theatre Circuit, Inc., 43 F.R.D. 197 (S.D.N.Y.1967). See generally, 1A Barron & Holtzoff §§ 366-369.

Under 46 U.S.C. § 183(a), the owner of a vessel may limit his liability

* * * for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, * * * so that such liability shall not exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.

Plaintiffs initially contend that the limitation statute is inapplicable since there was a personal contract between the defendant and plaintiff, Steuart Petroleum Company. This contract was to supply fuel oil to the Bauer Dredging Construction Co., Inc. for use on the dredge and all attendant plants. Defendant denies the existence of a contract, but admits that it purchased fuel oil from the said plaintiff and that the financial arrangements for this purchase involved a billing rather than a cash transaction.

It has long been held that a defendant cannot take advantage of the limitation act where the liability rests on his personal contract. Coryell v. Phipps, 317 U.S. 406, 63 S.Ct. 291, 87 L.Ed. 363 (1943); Capitol Transp. Co. v. Cambria Steel Co., 249 U.S. 334, 39 S.Ct. 292, 63 L.Ed. 631 (1919); Luckenbach v. W. J. McCahan Sugar Refining Co., 248 U.S. 139, 39 S.Ct. 53, 63 L.Ed. 170 (1918); Pendleton v. Benner Line, 246 U.S. 353, 38 S.Ct. 330, 62 L.Ed. 770 (1918). As stated by Chief Justice Hughes, "for his own fault, neglect, and contracts the owner remains liable." American Car & Foundry Co. v. Brassert, 289 U.S. 261, 264, 53 S.Ct. 618, 619, 77 L.Ed. 1162 (1933).

These decisions are in keeping with the tenor of the Act since the purpose in its enactment was to limit the liability which the law imputes to a shipowner by reason of his relation to the ship, her master and crew, and not that liability which he voluntarily assumes by express contract. Petition of Hutchinson, 28 F. Supp. 519 (E.D.N.Y.1938). These cases involved personal contracts for the carriage of goods where a warranty, either expressly or impliedly, was given that the vessel was seaworthy. Coryell, supra; Cullen Fuel Co. v. W. E. Hedger, Inc., 290 U.S. 82, 54 S.Ct. 10, 78 L.Ed. 189 (1933); Capitol Transp. Co., supra; Pendleton, supra.

The facts in this case are different. The question presented before this court is whether an owner can take advantage of the limitation statute when, after the purchase and loading of cargo on board a vessel, and after the vessel has left the dock embarking on its voyage, it subsequently is forced to return whereupon it strikes the dock causing considerable damage. Plaintiffs allege that since the defendant purchased fuel oil from them on credit, rather than payment at the time of purchase, a personal contract was formed ruling the limitation act inapplicable. This court feels that plaintiffs' reading of this exception is too broad. If this were so, a premium would be placed upon a purchase by cash rather than credit resulting in liability because of form, rather than substance.

As stated above, those courts finding a bar to the limitation statute have found an owner's implied or expressed warranty of seaworthiness. The courts have held that the injured plaintiff should not be precluded from recovering the entire amount of his loss where such a warranty of seaworthiness was given. The statute was not enacted to cover the owner's knowing and voluntary acts. Through no such reading of the facts in this case, however, can this court find such a warranty. The personal contract, if there was one, was solely for the selling of fuel oil to the defendant.

Plaintiffs rely upon the fact that defendant was billed for the oil delivered rather than paying for such oil through a cash transaction. Assuming for the sake of argument that a contract exists, it is only an independent sales contract, with each purchase of fuel oil making up a new contract. There was no obligation on the part of defendant to purchase any oil from the plaintiffs. The only obligation undertaken was for the payment of each purchase at a later date. No warranty of seaworthiness was given, nor would one ordinarily be implied. This court feels that merely because the defendant purchased its cargo from the plaintiff, Steuart Petroleum Company, and through a fortuitous circumstance the defendant's vessel damaged the plaintiffs' pier, the limitation of liability statute should not be barred. Merely because the vessel purchased cargo at the pier is not nexus enough to warrant ruling the statute inapplicable.

Plaintiffs also contend that if the limitation statute should apply, then the tug, barge and dredge should all be surrendered to this court or a sum deposited equal to the amount or value of these vessels, as required by 46 U.S.C. § 185.

The question of what constitutes a vessel has plagued admiralty courts for years. It has arisen in many and varied factual backgrounds with the underlying rationale derived from each opinion always being that each case must be decided on its own facts. Courts have tried to categorize their factual situations as a "consensual situation" or a "pure tort situation" in concluding whether the offending vessel is a single one or a unitary aggregate of two or more. See Sacramento Nav. Co. v. Salz, 273 U.S. 326, 47 S.Ct. 368, 71 L.Ed. 663 (1927); Liverpool, Brazil & River Plate Steam Nav. Co. v. Brooklyn E. Dist. Terminal, 251 U.S. 48, 40 S.Ct. 66, 64 L.Ed. 130 (1919). Quoting from In re Midland Enterprises, Inc., 296 F.Supp. 1356 (S.D.Ohio 1968):

In its simplest form it is stated that, in a pure tort situation—i.e. one in which there is no contractual relationship between the offender and the person or persons injured—then, the "offending vessel" is the one which really caused the damage (Liverpool). On the other hand where there is a contractual relationship the search need not be reduced to one but only to those two or more actually engaged in carrying out the contract. For example (of the latter situation) A contracts with B to dredge B's harbor. A dedicates to the performance a dredge and a tug and a barge and while all three are in the harbor at work, the tug knocks down B's dock or sinks B's vessel; in such a situation the socalled "flotilla" rule is invoked and to limit A must surrender all three of his ships as the "vessel". They are joined into one, so say the books, by "consensuality". Id.

...