Val Marine Corporation v. Costas

• Decision Date: 17 June 1958
• Docket Number: Docket 24871.,No. 262,262
• Citation: 256 F.2d 911
• Parties: VAL MARINE CORPORATION, Petitioner-Appellant, v. Leonard COSTAS, Claimant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

256 F.2d 911 (1958)

VAL MARINE CORPORATION, Petitioner-Appellant, v. Leonard COSTAS, Claimant-Appellee.

No. 262, Docket 24871.

United States Court of Appeals Second Circuit.

Argued March 24, 1958.

Decided June 17, 1958.

Robert S. Blanc, Jr., of Hill, Betts & Nash, New York City (Edwin Longcope and David C. Wood, New York City, on the brief), for petitioner-appellant.

Alfred J. Skidmore, New York City (James B. Magnor and Charles N. Fiddler, of Kirlin, Campbell & Keating, New York City, on the brief), for claimant-appellee.

Before CLARK, Chief Judge, LUMBARD, Circuit Judge, and DIMOCK, District Judge.

CLARK, Chief Judge.

This proceeding started as one for exoneration or limitation of liability for a collision between petitioner's Tug Val No. 1 and claimant Leonard Costas' motor boat in the East River, New York City, on September 2, 1953. Since the tug proved to be worth more than all claims, and no damages were sought for it, the action eventually became one for the adjustment of Costas' claims for personal injury and property damages and the claims for personal injuries of the three guests aboard his motor boat. An issue developed as to responsibility for the collision, petitioner and claimant each charging the other categorically with negligence and in turn denying all fault. This issue was tried at length before Judge Dawson, who eventually found that both were at fault and ordered the damages equally divided. D. C.S.D.N.Y., 145 F.Supp. 551. The damages for the four occupants of the motor boat were then fixed, and the action terminated in a final decree ordering a division of these damages and their payment in the first instance by petitioner (except for a small setoff against Costas), but ultimately denying all right of contribution to petitioner. This anomalous result effectually rendered abortive all the petitioner's hard won, if partial, victory; it also nullified the judge's own reasoned decision dividing the damages. It is justified by the judge on the ground that petitioner had made no claim against Costas. Claimant supports this ruling with the additional assertion of delay that "during the three and one-half years the proceeding was pending in the district court no cross-claim, cross-libel or other pleading asking for such affirmative recovery was filed or requested to be filed by the petitioner." Since the issue on appeal is this denial of all right of contribution we must examine these contentions.

We may conveniently start with a chronological statement of events. The petition was filed on March 1, 1954, and pleadings and claims were completed that spring. A note of issue for trial was filed February 10, 1955, and Notices of Readiness for Trial were filed on August 24 and 31, 1955. After pre-trial on June 4, 1956, trial was had on June 6, 7, and 22, 1956, before Judge Dawson, who filed his opinion for the equal division of damages on October 25, 1956. This opinion directed the submission of decrees on five days' notice; the parties complied, and the court entered an interlocutory decree with reference to a commissioner on December 17, 1956. The commissioner having died, trial of one of the claims was had before Judge Dawson, who filed a memorandum on May 28, 1957, awarding $12,500 damages to this claimant. The other claims being settled by stipulation, the court ordered the parties to submit drafts of a final decree. They did so under date of June 27, 1957, and the judge entered his final decree on July 1, 1957.

The mere recital of these dates shows rather unusual expedition for an admiralty case. Certainly there was no such delay as appellee relies on; after the amounts became fixed, and the right to contribution clear, there was at most a delay of just about a month before the matter was frozen in final form. Since the parties appear to have been pressing their contentions throughout, as noted below, we perceive no real delay. Hence the ruling below must rest entirely upon some failure to observe a binding requirement of procedure. And this has to be judicially fabricated, since no specific Admiralty Rule covers the situation.¹ But we do not think such a requirement consistent with the flexible procedure of admiralty or modern practice generally.

Before we consider these contentions in detail it will be well to note the amounts involved. By stipulation Costas' damage was set at $1,800, of which $900 was to be paid by petitioner. Also by agreement the claims of two of the guests were set at $2,250 and $250, in each case without interest or costs. The third guest whose claim was tried was allowed $12,500, plus costs of $274.77, making his claim $12,774.77, with interest to accrue from the date of the decree. Thus petitioner was ordered to pay the guests a total of $15,274.77, plus interest as it accrued on one of the claims; additionally it was obligated to pay $900 to Costas, but this was cancelled as an offset to contribution. So Costas, who had been found obligated to pay one-half the damage, actually was required to pay nothing, though he was denied the right to recover the $900 half of his own damage. It would seem that Costas has done rather well by virtue of his opponent's mistakes.

Now it is true that petitioner never filed a formal cross-claim or counterclaim asking specifically for contribution. Neither did Costas. After his original answer and claim for full reimbursement before the trial, Costas filed no further pleading. If petitioner is to be held to the strict standard here set it is hard to see why Costas should not be held equally derelict; after the filing of the opinion finding mutual fault, he could reasonably look forward to a decree ordering him to pay one-half of the damages of the three guests.

In actual fact, however, the position of each of the parties was made abundantly clear by the draft decrees they submitted on the two occasions as requested by the trial judge. There was no occasion to act until the judge filed his decision as to fault; up to that time each was fighting for complete exoneration. When the opinion came down it was to be expected that the court's decree would make effective what the court had found. So Costas submitted his draft of an interlocutory decree under date of November 20, 1956, and petitioner submitted its counterdraft dated November 26, 1956. The Costas draft, beyond findings of mutual fault and an order for limitation of liability, merely ordered petitioner to pay one-half of Costas' damage and the damages of the three guests in full, while the counterdraft included the two significant paragraphs — one for setoff and one for contribution — which are quoted in the margin.² The interlocutory decree actually signed by the court on December 17, 1956, did not fully conform to either draft, but contained a paragraph denying Costas the aggregate of all amounts that the petitioner might have to pay to the three guests in over one-half their claims.³ The wording is rather blind, but might well be taken as preserving the rights of the parties for the time being and until final decree.

Turning to the steps leading to the entry of the final decree, it appears that each party submitted a draft under date of June 27, 1957. Each of these provided for setoff of the $900 due Costas against amounts paid by petitioner to the guests in excess of one-half their damages. Petitioner's draft then continued with the clear and explicit provision for contribution which is quoted in the margin.⁴ Instead of this Costas presented a draft which the judge accepted and signed; this contained the following provision, with the italicized words written in and initialed by the judge: "2. It appearing that one-half of said payment to claimants Nicholas Torges, George Costas and Richard A. Brennan exceeds the aforesaid recovery of claimant Leonard Costas, and no claim having been made by the petitioner against Leonard Costas, the petitioner and said claimant Leonard Costas shall be discharged from liability to each other after said payment to said claimants has been made." Since the other provisions of the decree direct the petitioner to pay the claims found due, this effectively denies all right of contribution here or hereafter; the words added by the judge show not only the need he felt for specific explanation, but also his ground of the absolute necessity of a formal pleading presenting the claim. But the matters recited show that the petitioner had made its contentions clear beyond all dispute if, indeed, the ultimate outcome was not forecast, or made inevitable, by the judge's finding of mutual fault.

While the point had been somewhat questioned earlier, recent decisions had made it thoroughly clear that cross-claims or counterclaims are recognized in a limitation proceeding and that all claims should desirably be settled in that one proceeding. British Transport Commission v. United States, 354 U.S. 129, 77 S.Ct. 1103, 1 L.Ed.2d 1234, affirming 4 Cir., 230 F.2d 139; Moore-McCormack Lines v. McMahon, 2 Cir., 235 F.2d 142; Note, Joinder and Impleader Practice in Limitation Proceedings: An Expanded Concourse for Admiralty Litigants, 66 Yale L.J. 121 (1956). Since here the matter of divided damages had been so thoroughly tried out and the issues between the parties so completely settled, there was every reason for the complete settlement of these matters below. Had the judge followed the to-be-expected course of making his decree effectuate his opinion, no further pleading would have been necessary and the matter would have been effectively closed. See Admiralty Rule 53, cited in note 1.⁵ But in any event, under F.R. 15(b), a practice well known in admiralty,⁶ when issues not raised by the pleadings are tried by express or implied consent of the parties, they are to be treated in all respects as if raised in the pleadings. See also F.R. 54(c), applying a similar rule with respect to matters not expressly covered by the prayer for relief. Thus if a...