Opinion · Supreme Court of the United States
Hartford Accident & Indemnity Co. v. Southern Pacific Co.
273 U.S. 207
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1927-02-21
- Topic
- general
How later courts describe this case
- holding that a federal district court retains jurisdiction even after a denial of a petition for limitation of liability
- “[P]ending the filing of [a] formal stipulation, the ad interim undertaking should stand 13 as security for all claims in the proceeding.”
- \“the court may enter judgment in personam against the owner as well as judgment in rerr 23
- against the res, or the substituted fund”
- involving an ad interim stipulation executed by the boat owner and a surety
- see also cases cited in: 1 Benedict on Admiralty (1940 Ed.), § 71; and Gilmore and Black, The Law of Admiralty (1957 Ed.), §§ 1-14
- "liability as owner shall be limited to the value of the vessel as appraised after the occurrence of the loss and the pending freight for the voyage"
- admiralty court “may furnish a complete remedy for the satisfaction of ... claims by distribution of the res” if limitation is denied
Citator
UpLaw has not yet analyzed Hartford Accident & Indemnity Co. v. Southern Pacific Co.. The absence of a flag is not a finding that it is good law.
- Cited by
- 218 opinions
HARTFORD ACCIDENT CO.v. SOU. PACIFIC,273 U.S. 207(1927)
47 S.Ct. 357
HARTFORD ACCIDENT INDEMNITY COMPANYv. SOUTHERN PACIFIC COMPANY ET AL.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.
No. 45.
Argued December 2, 1926.
Decided February 21, 1927.
CERTIORARI (267 U.S. 590) to a decree of the Circuit Court of
Appeals which affirmed a decree of the District Court requiring a
stipulator for value in a limitation of liability proceeding to
pay into court the value of its principal's vessel and pending
freight.
The Act was passed for the purpose of encouraging ship owners and should be liberally construed in their favor.La Bourgoyne,210 U.S. 95. InNorwichv.Wright, 13 Wall. 104, it was held to apply to collision cases. InProvidence S.S. Co. v.HillMfg. Co.,109 U.S. 578, it was extended to cover loss by fire. InButlerv.Boston S.S. Co.,130 U.S. 527, it was extended to personal injuries, as well as to injuries of property.
TheBolikowwas sold after the disaster for the sum of $250. This was theresagainst which the appellee and other claimants intervening could have proceeded by a libelin rem. It was all that was within the jurisdiction of the court. Believing that it was not liable at all, the Oil Company filed its petition and thead interimstipulation adding to the $250 the freight earned on the last voyage, amounting to about $11,000.
The precise question now before this Court has never been determined. DistinguishingThe Virginia, 266 F. 437. A proceeding for limitation of liability is a proceedingin rem;or an equitable proceedingin rem. After limitation of liability is denied, there ceases to be aresin court and the proceeding should either be dismissed or cease to be onein remand become a proceedingin personam, with no more jurisdiction left in the court than to ascertain, as in a libelin personam, the amount due each claimant, or to have the court refer this question to a commissioner for a like purpose.In re SmithSons, Inc., 193 F. 395;In re Pacific Mail S.S. Co.,Page 209130 F. 76;The Santa Rosa, 249 F. 160;The Titanic, 204 F. 295.
To hold that the court could still proceed to adjudicate the rights of the various parties would necessitate a holding that the rights of the intervening claims against the ship owner, whether sounding in contract or tort, and whether arising in admiralty or not, can be adjudicated in a federal court, though they may arise between citizens of the same State. Such holding would mean that, though each claimant as against the owner is entitled to a jury, the limitation of liability act would deprive him of such privilege.Mr. Roscoe H. Hupper, with whomMessrs. W.T. ArmstrongandW.E. Cranfordwere on the brief, for respondents.
The court has the right to decree the payment into court of the appraised value of the barge and her pending freight for such disposition of it as the court could legally have made of it had it originally been paid into the registry of the court and not been bailed out.The Benefactor,103 U.S. 239; Rev. Stats. §§ 4282-4285 inc. The principle that there occurs a complete and irrevocable surrender of the actual property to the court is frequently expressed.Prov. S.S. Co. v.Hale Mfg. Co.,109 U.S. 578;Re Morrison,147 U.S. 14;The H.F. Dimock, 52 F. 598;The Wanata,95 U.S. 600;United Statesv.Ames,99 U.S. 35;The City of Norwich,118 U.S. 468.
It is true that in the earlier cases, such asThe RepublicandThe Eureka, as stated inThe Titanic, 204 F. 295, the doctrine "is assumed," though not asserted; but when the question came up squarely it was definitely decided by the lower courts that in a limitation proceeding where exemption from liability as well as a right to limit liability is asserted, the court has completePage 210and exclusive jurisdiction of the entire controversy and may proceed to render a final decree for the full amount of damages in favor of the claimant even though limitation of liability is denied. The court, continuing to have jurisdiction over the proceeding for the purpose of doing justice by the claimants, does not lose control of theres, that is, the vessel and its pending freight, which has been placed in court by the petitioner in order to secure the proceeding. Benedict, Admiralty, 4th ed., § 527.The Lydia, 1 F.2d 69.
It is an action in the nature of a creditor's bill for the purpose of securing a concourse of the creditors on account of a particular accident in which the vessel and her pending freight are impounded for the purpose of being surrendered to such creditors in the event they establish claims against the owner of the impounded fund. The owner of the fund makes the issues to be litigated in the action by his petition and consequently defines the measure of possible recovery against the fund and against himself. It would seem that the right against the fund should be held to be co-extensive with the limits of possible recovery fixed by the petition.The Garden City, 26 F. 771;Dowdellv.District Ct., 139 F. 445;Providence S.S. Co. v.HillMfg. Co.,109 U.S. 578;Blackv.S.P.R. Co., 39 F. 565;Oregon R.R. Nav. Co. v.Balfour, 90 F. 295;Butlerv.Boston S.S. Co.,130 U.S. 527.
The whole proceeding is in reality an equitable actioninremandin personam— an equitable suit to the extent that the admiralty court, having the broadest of powers to do exact justice between the parties, may take any such action in the case as justice demands, — an actionin remin so far as the judgments reach the fund placed in court by the petitioner, andin personamin so far as the personal liability of the petitioner is established or found not to exist.Re Morrison,supra; Dowdellv.Dist.Page 211Ct., supra;Re Pacific Mail S.S. Co., 130 F. 76;The AnnieFaxon, 75 F. 312; Benedict, Admiralty, 4th ed., § 519.
Pursuant to the court's order, the National Oil Transport Company and the Hartford Accident Indemnity Company executed anad interimstipulation that the former, as principal, and the latter, as surety, undertook in the sum of $11,326.85, with interest, that the Transport Company would file a bond or stipulation for the limitation of its liability as owner of the bargeBolikow, executedPage 212in due form of law for the value of the Transport Company's interest in the barge and her pending freight, with six per cent, interest thereon from December 23, 1920, within ten days after such values were determined by appropriate proceedings in the court and an order fixing such value was entered therein, and that pending the filing of the formal stipulation, theadinterimundertaking should stand as security for all claims in the proceeding.
The court then made an order directing the issuing of a monition to claimants against the vessel and her owner growing out of the explosion, and an injunction. Without further action as to fixing the value of the barge or its pending freight, the claimants came in, the cause proceeded to a final decree, after a report by a commissioner, the petition for limitation of liability was denied, the claims in whole or in part were allowed, and the decree proceeded:
"And it further appearing to the Court that neither the petitioner nor its stipulator nor any other party or interest has moved for or caused any re-appraisal or appraisal of the petitioner's interest in said barge and her pending freight, or either of them or caused any order to be entered by the Court fixing such value except as was done by the approval and filing of saidad interimstipulation as aforesaid and the issuance and publication of a monition thereon as aforesaid, and it further appearing to the Court that no bond for value other than saidad interimstipulation has been filed herein by the petitioner and it appearing from the evidence introduced on the trial hereof and the Court here and now finding that the value of the petitioner's interest in said barge at the termination of her voyage is $250, and that the value of the petitioner's interest in the pending freight of said barge at the termination of said voyage is $11,076.85, and that the total value of said petitioner's interest in said barge and herPage 213pending freight at the termination of her said voyage is $11,326.85; it is therefore ordered and decreed that unless this decree be satisfied or an appeal be taken therefrom within the time limited by law and the rules and practice of this Court, the stipulator for value will cause the said petitioner to pay into Court the sum of $11,326.85, the amount of the value of the petitioner's interest in the said barge and pending freight at the termination of her said voyage, with 6 per cent. interest from December 23, 1920, to be applied in payment of the costs of Court, the remainder to be pro-rated among the respective claimant-respondents in proportion to the amounts of the decrees entered in their favor herein, or show cause why execution should not issue therefor, against goods, chattels and lands of the stipulator for value."
The Hartford Indemnity Company, the stipulator, appealed from this decree, which the Circuit Court of Appeals of the Fifth Circuit affirmed.3 F.2d 923. We brought the case here by certiorari.267 U.S. 590.
The contention of the petitioner is, that it could become liable only in the event limitation of liability was granted, and, as that relief was denied, the stipulation ceased to be effective; that upon a denial of a limitation of liability there ceased to be aresin court; that the proceeding was no longer onein rem;and that suits for the claims against the ship owner must be conducted in a court having jurisdiction on other grounds.
It is surprising that no case has ever arisen in which the question here mooted has been directly decided, though the effect of a decision refusing limitation has been the subject of discussion inThe Titanic, 204 F. 295, and inThe Virginia, 266 F. 437, 439. See alsoDowdellv.U.S. District Court, 139 F. 444;In re Jeremiah Smith Sons, 193 F. 395;TheSanta Rosa, 249 F. 160.
The history and proper construction of the Limitation of Liability Act of 1851,9 Stat. 635, now embodied inPage 214Revised Statutes, §§ 4282 to 4287, are shown in a series of cases in this Court, the chief of which is theNorwich Companyv.Wright, 13 Wall. 104. Further consideration to this subject was given by the Court inThe Benefactor,103 U.S. 239; in theProvidence New York Steamship Companyv.Hill ManufacturingCompany,109 U.S. 578; in theCity of Norwich,118 U.S. 468,503; inThe Scotland,118 U.S. 507; inButlerv.BostonSavannah Steamship Company,130 U.S. 527; inIn re Morrison,147 U.S. 14,34; inThe Albert Dumois,177 U.S. 240; inTheHamilton,207 U.S. 398, and in theLa Bourgogne,210 U.S. 95.
These decisions establish, first, that the great object of the statute was to encourage shipbuilding and to induce the investment of money in this branch of industry, by limiting the venture of those who build the ship to the loss of the ship itself or her freight then pending, in cases of damage or wrong, happening without the privity or knowledge of the ship owner, and by the fault or neglect of the master or other persons on board; that the origin of this proceeding for limitation of liability is to be found in the general maritime law, differing from the English maritime law; and that such a proceeding is entirely within the constitutional grant of power to Congress to establish courts of admiralty and maritime jurisdiction,Norwichv.Wright, 13 Wall. 104; that to effect the purpose of the statute, Admiralty Rules Nos. 54, 55, 56 and 57 (now 51-54; see 254 U.S. Appendix, p. 25,) were adopted, by which the owner may institute a proceeding in a United States District Court in admiralty against one claiming damages for the loss, in which he may deny any liability for himself or his vessel, but may ask that if the vessel is found at fault his liability as owner shall be limited to the value of the vessel, as appraised after the occurrence of the loss, and the pending freight for the voyage; that these damages shall include, damages toPage 215goods on board, second, damages by collision to other vessels and their cargoes, and, third, any other damage or forfeiture done or incurred; that all others having similar claims against the vessel and the owner may be brought into concourse in the proceeding, by monition, and enjoined from suing the owner and vessel on such claims in any other court; that the proceeding is equitable in its nature and is to be likened to a bill to enjoin multiplicity of suits,Providence Steamship Co. v.HillManufacturing Company,109 U.S. 578; that, by stipulation after appraisement, the vessel and freight may be released and the stipulation be substituted therefor; that, on reference to a commissioner and the coming in of his report, it shall be determined, first, whether the owner and his vessel are liable at all; second, whether the owner may avoid all liability except that of the vessel and pending freight; third, what the amount of the just claims are, and, fourth, how the fund in court should be divided between the claimants. The cases show that the court may enter judgmentin personamagainst the owner as well as judgmentin remagainst theresor the substituted fund,City of Norwich,118 U.S. 468,503; that the fund is to be distributed to all established claims to share in the fund to which admiralty does not deny existence, whether they be liens in admiralty or not,The Hamilton,207 U.S. 398,406; and that they may include damages from a collision, from personal injuries,Butlerv.Boston Steamship Co.,130 U.S. 527, or for wrongful death, if arising under a law of Congress, a State of the Union or a foreign state, which is applicable to the owner and the vessel.The Bourgogne,210 U.S. 95,138.
It is quite evident from these cases that this Court has by its rules and decisions given the statute a very broad and equitable construction for the purpose of carrying out its purpose and for facilitating a settlement of the whole controversy over such losses as are comprehended withinPage 216it, and that all the ease with which rights can be adjusted in equity is intended to be given to the proceeding. It is the administration of equity in an admiralty court.Dowdellv.United States District Court, 139 F. 444, 445. 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 proceedingsin remagainst the ship as well as to proceedingsin personamagainst the owner, the limitation extending to the owner's property as well as to his person.The City of Norwich,118 U.S. 468,503.
With this general view of the statute, we come to the contention of the petitioner in this case. It says that the owner only brings the suit to limit his liability, if it exists, to the vessel and the freight for the voyage. If he fails in his purpose and does not establish the limitation, no progress can be made in behalf of the defendant or the claimants in the collection of what has been found due them; and, because he has lost that feature of his suit against them, the case must be dismissed. This is said to follow, even though it is apparent that by virtue of the owner's suit and the injunction he secured he has delayed and prevented his creditors from resorting to any other forum to vindicate their rights against him. In this view the defendant and the claimants thus may not thereafter share in the fund orres, the deposit of which for the benefit of the defendants and the claimants was the principal ground and the indispensable condition of the proceeding. The parties, it is argued, must thereafter be remitted to a common law or equity court of the State to secure their rights, unless diverse citizenship or the admiralty character of their claims entitles them to resort to, or remain in, a federal court.
Surely the admiralty court, in view of the large powers intended to be given it in such a proceeding, is not so helplessPage 217as this. So to hold would be to hold that, unless the petitioner wins, the court does not have power to administer justice. There is nothing in the statute, nor in the rules, that requires so feeble a conclusion. The jurisdiction of the admiralty court attachesin remandin personamby reason of the custody of theresput by the petitioner into its hands. The court of admiralty, in working out its jurisdiction, acquires the right to marshal all claims, whether of strictly admiralty origin or not, and to give effect to them by the apportionment of theresand by judgmentin personamagainst the owners, so far as the court may decree. It would be most inequitable if parties and claimants, brought in against their will and prevented from establishing their claims in other courts, should be unable to perfect a remedy in this proceeding promptly, and should be delayed, until after the possible insolvency of the petitioner, to seek a complete remedy in another court, solely because the owner can not make his case of personal immunity. 1 Benedict's Admiralty, 5th ed., 488. If Congress has constitutional power to gather into the admiralty court all claimants against the vessel and its owner, whether their claims are strictly in admiralty or not, as this court has clearly held, it necessarily follows as incidental to that power that it may furnish a complete remedy for the satisfaction of those claims by distribution of theresand by judgmentsin personamfor deficiencies against the owner, if not released by virtue of the statute.
Such a conclusion, is quite in accord with the rules governing equity procedure in general conformity with which this limitation of liability statute has been construed and enforced. Where a court of equity has obtained jurisdiction over some portion of a controversy, it may and will in general proceed to decide all the issues and award complete relief, even where the rights of parties are strictly legal and the final remedy granted is of the kindPage 218which might be conferred by a court of law. 1 Pomeroy's Equity Jurisdiction, 4th ed., §§ 181 and 231;United Statesv.UnionPacific Railway,160 U.S. 1,52. See also Equity Rule 10, amended May 4, 1925,268 U.S. 709, Appendix. Of course, this equitable rule enlarging the Chancellor's jurisdiction, in order to completely dispose of the cause before him, does not usually apply in an admiralty suit.Grantv.Poillon, 20 How. 162;Turnerv.Beacham, Taney's Reports 583, Federal Case No. 14252;The Pennsylvania, 154 F. 9;The Ada, 250 F. 194. But this limitation of liability proceeding differs from the ordinary admiralty suit, in that, by reason of the statute and rules, the court of admiralty has power (Providence SteamshipCo. v.Hill Manufacturing Co.,109 U.S. 578) to do what is exceptional in a court of admiralty — to grant an injunction, and by such injunction bring litigants, who do not have claims which are strictly admiralty claims, into the admiralty court. Benedict on Admiralty, 5th ed., § 70, note 97. There necessarily inheres, therefore, in the character of the limitation of liability proceeding, in reference to such non-admiralty claims, the jurisdiction to fulfil the obligation to do equitable justice to such claimants by furnishing them a complete remedy.
The indemnity company seeks in this review to avoid its liability under anad interimstipulation having a provision that such stipulation, if not changed to a formal stipulation, shall stand as security for all claims in the limitation proceeding. The stipulation is a substitute for the vessel itself and the freight which was released by reason thereof. The effect of such a stipulation in admiralty is set forth by Mr. Justice Story inThe Palmyra, 12 Wheat. 1, where he says:
"Whenever a stipulation is taken in an admiralty suit, for the property subjected to legal process and condemnation, the stipulation is deemed a mere substitute for the thing itself, and the stipulators liable to the exercise ofPage 219all those authorities on the part of the court, which it could properly exercise if the thing itself were still in its custody. This is the known course in admiralty. It is quite a different question whether the court will, in particular cases, exercise its authority where sureties on the stipulation may be affected injuriously; that is a question addressed to its sound discretion."
InThe Oregon,158 U.S. 186,210, after reference toThePalmyraand an examination of the English authorities, it was held that the use of bail as a substitute for the property itself is confined to "all points fairly in adjudication before the Court." In that case a stipulator for the release of a vessel libeled for a collision was held not to be responsible to interveners in the suit, intervening after the release of the vessel, in the absence of express agreement to that effect. In reversing the court below, this Court said, through Mr. Justice Brown:
"We think the court must have confounded a stipulation given to answer a particular libel with a stipulation for the appraised value of the vessel, under the limited liability act, which by general admiralty rule 54, is given for payment of such value into court whenever the same shall be ordered, and in such case the court issues a monition against all persons claiming damages against the vessel, to appear and make due proof of their respective claims. And by rule 55, after such claims are proven and reported, `the moneys paid, or secured to be paid into court as aforesaid, or the proceeds of said ship or vessel and freight shall be divided pro rata amongst the several claimants, in proportion to the amount of their respective claims.' By rule 57, if the ship has been already libelled and sold, the proceeds shall represent the same for the purpose of these rules. In all cases cited, in which it has been said that the stipulation is a substitute for the thing itself, the remark has been made either with reference to the particular suit in which the stipulation is given, or with reference to a stipulation for the appraised value of the vessel,Page 220where the stipulation stands as security for any claim which may be filed against her up to the amount of the stipulation."
It is quite evident from this that the stipulation under Rule 51 (formerly 54),et seq., is to be treated as a substitute for the vessel itself for all claims that may normally arise out of the character of litigation carried on under such rules. That litigation, as we have seen, may properly be carried to a complete settlement of all claims, without regard to whether the prayer for limitation of liability is denied or not. The stipulator must, therefore, pay in full on his undertaking to enable the court to pay the costs and make the pro rata distribution.Judgment affirmed.