United States v. Alaska Steamship Company

• Decision Date: 28 January 1974
• Docket Number: No. 71-2934.,71-2934.
• Citation: 491 F.2d 1147
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. ALASKA STEAMSHIP COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

491 F.2d 1147 (1974)

UNITED STATES of America, Plaintiff-Appellee, v. ALASKA STEAMSHIP COMPANY, Defendant-Appellant.

No. 71-2934.

United States Court of Appeals, Ninth Circuit.

January 28, 1974.

M. Bayard Crutcher (Argued) Edward S. Franklin of Bogle, Gates, Dobrin, Wakefield & Long, Seattle, Wash., for defendant-appellant.

Theodore A. LeGros (Argued) of Howard, LeGros, Buchanan & Paul, Stan Pitkin, U. S. Atty., Seattle, Wash., Lawrence F. Ledebur, Chief Admiralty & Shipping Section U. S. Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Before KOELSCH and TRASK, Circuit Judges, and JAMESON,^* District Judge.

JAMESON, District Judge:

Defendant-appellant, Alaska Steamship Company, has appealed from a judgment awarding plaintiff-appellee, United States of America, indemnity for a payment made in settlement of a longshoreman's personal injury claim.

Statement of the Case

On February 24, 1966 James D. Harris, a longshoreman in the employ of Alaska Steamship, was injured while loading stores aboard the Creighton Victory, a public vessel owned by the United States. The Creighton Victory, on August 15, 1965, had been assigned for its operation to Alaska Steamship under a Service Agreement executed in 1956 whereby the United States appointed Alaska Steamship as a General Agent to manage public vessels assigned to it.¹

Harris sued the United States, but prior to trial counsel for the Government's private insurance carrier, Commerce & Industry Insurance Company, settled the claim for $17,500. Alaska Steamship paid this amount, and also paid its counsel $304.73 for their services in investigating the accident.² Commerce & Industry reimbursed Alaska Steamship in the amount of $16,804.73, and the Government paid the remaining $1,000, the amount of the deductible under the insurance policy.

The Government brought this action to recover from Alaska Steamship the amount of the settlement, plus costs and expenses. Alaska Steamship asserted a counterclaim for the cost of defending the action, alleging breach by the Government of its promise in the Service Agreement to insure and indemnify Alaska Steamship. Following trial the court in its findings of fact and conclusions of law accepted the Government's theory of the case, entered judgment for the Government,³ and dismissed the counterclaim.

Findings of District Court

Findings of fact questioned by appellant and critical to a determination of this appeal include:

"IX. Alaska Steamship Company, on February 24, 1966, was engaged in business as a stevedore contractor acting by and through its Terminal and Stevedoring Division, which Terminal and Stevedoring Division submitted statement of account to the United States Department of Commerce, Maritime Administration, for charges assessed by that Division in rendering stevedoring services to the SS CREIGHTON VICTORY, including services rendered on February 24, 1966.

"X. The services rendered by Alaska Steamship Company, acting by and through its Terminal and Stevedoring Division, were performed pursuant to an independent oral agreement whereby Alaska Steamship Company, as General Agent, employed Alaska Steamship Company Terminal and Stevedoring Division to stevedore the SS CREIGHTON VICTORY on February 24, 1966. To do this the General Agent transferred employees of its Terminal and Stevedoring Division from its privately owned vessel to the SS CREIGHTON VICTORY where work was assigned by the Alaska Steamship Company Terminal and Stevedoring Division foreman Lee Martin.

"XI. It was the regularly established business practice of Alaska Steamship Company as General Agent, to employ Alaska Steamship Company Terminal and Stevedoring Division to provide stevedoring services for public vessels for which Alaska Steamship Company was appointed General Agent. This method of operation was approved by the United States acting through its duly constituted officials and statements of accounts as submitted by Alaska Steamship Company Terminal and Stevedoring Division for such stevedoring services were duly approved and paid by the United States.

"XII. Alaska Steamship Company, as General Agent was under a duty to procure or provide stevedoring services to the vessels for which it was appointed General Agent, including the SS CREIGHTON VICTORY on February 24, 1966. Alaska Steamship Company, as General Agent, was empowered by the provisions of the General Agency Agreement, being contract MA-1224-GAA, Article 9 thereof,⁴ to employ its own stevedoring department, being its Terminal and Stevedoring Division, to stevedore the SS CREIGHTON VICTORY. Under the oral contract of employment as a provision thereof was the obligation on the part of Alaska Steamship Company Terminal and Stevedoring Division to perform its work of loading stores in a workmanlike manner so as not to breach the warranty of workmanlike service owed by the stevedore to the shipowner.

"XIII. Alaska Steamship Company acting as an independent stevedore contractor through its Terminal and Stevedoring Division breached its warranty of workmanlike service owed to plaintiff as shipowner, which breach of warranty was the proximate cause of the accident to longshoreman James D. Harris. * * *"

Contentions of Appellant

Appellant contends that (1) neither the United States nor Commerce & Industry had a right to claim indemnity from Alaska Steamship; (2) there was no "oral contract"; (3) this is an improper subrogation suit, brought for the benefit of an insurance company against one of its assureds; and (4) Alaska Steamship is entitled to judgment against the Government for the expense of defending this action.

Right of Indemnity

Appellant contends that the district court should have dismissed the Government's action summarily on the ground that it is "wholly at odds with the long established policy of the Government to protects its general agents from liability for personal injuries suffered aboard public vessels."

Article 6(a) of the Service Agreement requires that the Government provide insurance covering both the United States and the General Agent against all insurable risks relating to public vessels assigned to Alaska Steamship as General Agent. It provides that "Neither the United States nor the insurance underwriters shall have any right of subrogation against the General Agent with respect to any of the foregoing risks." It is argued that the injury to Harris was an "insurable risk" and that the Government and Commerce & Industry therefore have no right of indemnity against Alaska Steamship.

It is clear that no right of indemnity would exist with respect to the acts of Alaska Steamship as a General Agent. Appellee contends, however, and the district court found, that the services rendered by Alaska Steamship resulting in the injury to Harris were performed pursuant to an "independent oral agreement" and that Alaska Steamship was acting "as an independent stevedore contractor through its Terminal and Stevedoring Division".⁵ The question of whether the Government and its insurer have a right of indemnity depends in large part upon a resolution of the second issue, i. e., whether there was a valid independent oral contract between the Government, through Alaska Steamship as its General Agent, and the Terminal and Stevedoring Division of Alaska Steamship.

Independent Oral Contract

Alaska Steamship first argues that the finding of an independent oral contract has "no basis in law" because in effect it constitutes a holding that a corporation may contract with itself — a legal impossibility.⁶ The Government contends, however, that in making the contract with its Stevedoring Division Alaska Steamship was acting in its capacity as a General Agent for the Government, so that the oral contract was in effect between the United States and Alaska Steamship's Stevedoring Division. Alaska Steamship next argues that it did not have authority under the Service Agreement to make contracts binding upon the Government. The Government replies that in any event it became a party to the contract through ratification of the General Agent's actions by paying Alaska Steamship for the stevedoring services.⁷

The initial question for determination is whether the district court's finding of an independent oral contract is supported by substantial evidence. "In reviewing a judgment of a trial court, sitting without a jury in admiralty, the Court of Appeals may not set aside the judgment below unless it is clearly erroneous. * * * A finding is clearly erroneous when, `although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed' * * *." McAllister v. United States, 348 U.S. 19, 20, 75 S.Ct. 6, 8, 99 L.Ed. 20 (1954).⁸ In determining whether a finding is clearly erroneous we "must view the evidence in the light most favorable to the party who prevailed below; such a party must be given the benefit of all inferences that may reasonably be drawn from the evidence." Pacific Queen Fisheries v. Symes, 307 F.2d 700, 706 (9 Cir. 1962). This is true even where the finding rests on an inference drawn from undisputed facts or documentary evidence and is not based on the trial court's opportunity to judge the credibility of witnesses. Lundgren v. Freeman, 307 F.2d 104, 113-115 (9 Cir. 1962); Wright & Miller, Federal Practice and Procedure: Civil § 2587 (1971), quoting with approval from Lundgren v. Freeman.

It is clear that the Service Agreement permitted a separate contract for stevedoring. There is no direct evidence that the parties entered into any formal separate agreement. In support of the district court's finding of an independent oral contract the Government relies primarily, as apparently did the district court, upon five exhibits.

Exhibit 1, an accident report of Harris' injury, shows Alaska Steamship Company as employer, its business as "Shipping", and is signed by the "Chief...