Black Diamond Corporation v. Robert Stewart & Sons/Dissent Jackson

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United States Supreme Court

336 U.S. 386

Black Diamond Corporation  v.  Robert Stewart & Sons

 Argued: Jan. 3, 4, 1949. --- Decided: March 14, 1949

Mr. Justice JACKSON, dissenting.

I suspect this decision will cause confusion in practical application of the Act of Congress governing limitation proceedings in admiralty.

The Act is designed to encourage American capital to risk itself in shipping ventures where 'ships are but boards, sailors but men; * * * and then there is the peril of waters, winds and rocks.' In order that disaster at sea might not jeopardize the shipowner's other assets, Congress limited his liability to the 'value of the interest of such owner in such vessel, and her freight then pending.' R.S. 4283, as amended, 49 Stat. 1479, 46 U.S.C. § 183, 46 U.S.C.A. § 183. [1] This limitation serves much the same purpose for maritime ventures that the corporate fiction serves for the landsman's enterprises.

The statute also provides a skeleton proceeding, filled in by our rules, for affirmatively effecting this limitation of liability when catastrophe threatens claims that exceed the value of ship and freight. To a landlocked mind it has some analogy to voluntary bankruptcy. It is, in effect, a turn-over of the assets at risk to satisfy creditors. The owner may, after petitioning the District Court for limitation of liability, either transfer to a trustee his interest in the vessel and freight, together with enough to make up the limitation, and be quit of further responsibility, or he may keep his ship and sail on, provided he shall deposit with the court 'a sum equal to the amount or value of the interest of such owner in the vessel and freight, or approved security therefor.' R.S. § 4285, as amended, 49 Stat. 1480, 46 U.S.C. § 185, 46 U.S.C.A. § 185.

Our statute is clear: § 4283 fixes the maximum liability at ship plus freight and § 4285 sets the minimum security at the same figure. To provide any other limit of liability or security is to rewrite both sections. As written, the two sections provide and are designed to provide a provisional remedy to let the ship go her way whil the creditors are secured as well as if she were held in custody to pay their claims.

Our own rules in admiralty, as amended June 21, 1948, 28 U.S.C.A., prescribe the practice for applying this limitation when the shipowner takes the initiative under R.S. § 4285. The proceeding is conducted in two stages. In the first or preliminary stage the owner petitions for relief from personal liability, is required either to surrender his interest in the ship and her freight or to stipulate, with adequate bond, to pay into court its value. The statute says, 'Upon compliance with the requirements of this section all claims and proceedings against the owner with respect to the matter in question shall cease.' At this point an important change in the nature of the proceeding occurs.

The proceeding continues as a proceeding in rem against either the ship or the fund as the res. Our rules provide that when petitioner complies with the court's order as to surrender or bond, the court shall issue a monition requiring all persons asserting claims to file the same and may also issue injunction against the further prosecution of suits against either the owner or the vessel. Rule 51. The court then adjudicates the claims and apportions the available fund among them. Rule 52. The owner is at liberty to contest his liability or the liability of the vessel 'provided he shall have complied' with the requirements of surrender or deposit as above set forth. Rule 53.

We think such compliance is a condition precedent to obtaining a forum concursus to adjudicate liability. As the petitioner in this case did not post the security nor surrender the ship as required, the court below properly dismissed the petition and refused to enter the second or adjudicating stage of the proceeding.

This Court apparently holds that compliance is not a condition precedent and that instead of the vessel's value some other measure of liability might be adequate. While it requires the prescribed bond in this particular case, it does so, as we read its opinion, only as a matter of discretion and because of uncertainty as to the final decision on the foreign law issue on appeal. It seems to authorize a foreign law limitation on liability to be applied before a forum concursus takes place, while we think any issue as foreign law liability is to be applied only in the latter stage of the proceedings when the general issues as to liability are to be determined.

Congress could not have been unaware that maritime usages the world over have imposed some limitation upon ship-owners' liability and that several bases for its ascertainment have existed. Some systems have admitted no personal liability of the owner, confining liability to the ship itself; others have limited the owner's personal responsibility on his abandonment of the ship and freight. Still others have limited personal responsibility to payment of a sum computed on the ship's tonnage. Congress, however, has deliberately imposed and adhered to our own measure of liability based on the actual value of the interest in the ship and her freight. We think there is no authority for releasing the owner from liability, or releasing the ship, which are the steps now under consideration, until the owner has complied with provisions which fully protect this American measure of liability.

In this case, the reason the owners did not comply with the American limitation provision is that they aver that on the Schelde, where the collision occurred, Belgian law granted a much more drastic limitation, under which their liability is only about one-third of that imposed by our law. The court below held that release of the owner and ship, and invocation of a forum concursus, could not be granted on this basis. But it held that if they had complied with provisions of American law necessary to reach the question of the amount of aggregate liability, they were at liberty to interpose the Belgian law as a defense. The Court now holds that this question of fact-what is the foreign law? should be determined as a part of the preliminary step in the case and that the bond may be limited thereby. We think this is not the scheme of the statute and the rules and that, except for issues subsidiary to the court's fixing of the security required under Rule 51, all matters of fact, going to the substance of liability, are to be heard only at the later stages of the proceedings.

The limitation figure is established preliminarily, not because it represents the res, but because the statute and rules prescribe that formula and procedure for fixing both the maximum liability and minimum security required of the owner. And it has no bearing on the amount of claims that may be proved-until the latter are determined and a proportion established there is no need to know, for that purpose, what limit of liability applies. Indeed, unless it is intended to also change the rule where the statutory limitation under R.S. § 4283 is set up as a defense, it may be asserted after trial on the merits and after judgment. The Benefactor, 103 U.S. 239, 26 L.Ed. 351. And by the terms of Rule 55, the provisions of Rules 51-54 regulating limitation of liability proceedings are made applicable even to the Courts of Appeals.

Admiralty practice is a unique system of substantive law and procedure with which members of this Court are singularly deficient in experience. The court below is perhaps the most experienced in this country. The issue on which we reverse it is not one of ultimate rights of parties but one of practice, the consequences of which cannot be foreseen. I should leave the problem, at least at this stage, where the Court of Appeals left it, with a minor exception.

Of course, it should be noted that the Government is exempt from giving any security, but that is an oversight that it hardly needed to come here to correct. It should have the limitation which Congress has prescribed.

Except for that detail, I would affirm.

It may be that petitioner should now be allowed to amend and file the required bond equal to the ship's value and proceed. It has not so far asked to do so, insisting instead upon what it thought to be its legal right to proceed without compliance. This question, too, may be left to the courts below.

Mr. Justice REED and Mr. Justice DOUGLAS join in this opinion.


^1  'The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or 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, shall not * * * exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.'

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).