Erie R. Co. v. Erie & Western Transp. Co., 204 U.S. 220 (1907)

U.S. Supreme Court

Erie R. Co. v. Erie & Western Transp. Co., 204 U.S. 220 (1907) Erie Railroad Company v. Erie and

Western Transportation Company

No. 134

Argued December 14, 1906

Decided January 14, 1907

204 U.S. 220

CERTIORARI TO THE CIRCUIT COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

Syllabus

Admiralty courts, being free to work out their own system and to finish the adjustment of maritime rights, have jurisdiction of an action for contribution for damages paid to third parties as the result of a collision for which both vessels were in fault. The claim is of admiralty origin. The division of damages in admiralty extends to what one of the vessels pays to the owners of cargo on the other vessel jointly in fault.

The right of division of damages to vessels when both are in fault and the contingent claim to partial indemnity for payment of damage to cargo are separable, and the decree of division in the original suit, the pleadings in which do not set up such claim for indemnity, is not a bar to a subsequent suit brought to enforce it.

142 F. 9 reversed.

Page 204 U. S. 221

The facts are stated in the opinion.

Page 204 U. S. 223

MR. JUSTICE HOLMES delivered the opinion of the Court.

This is a libel in admiralty, brought by the petitioner as successor in corporate identity to the Union Steamboat Company, to recover a part of a sum paid by it to the respondent

Page 204 U. S. 224

as the result of previous admiralty proceedings which came before this Court several times. The former proceedings were begun by the respondent, as owner of the propeller Conemaugh and bailee of her cargo, to recover for damages to both by a collision between her and the propeller New York. After hearings below, 53 F. 553, 82 F. 819, it was decided by this Court on certiorari that both vessels were in fault, and that the representatives of the cargo could recover their whole damages from the New York. The New York, 175 U. S. 187. Thereupon the district court entered a decree dividing the damages sustained by the steamers, requiring the New York to pay to the Conemaugh on that account $13,083.33 and interest, and further required it to pay all the damages to the cargo of the latter -- the insurers on cargo who had intervened receiving their share, and the Conemaugh receiving the residue as trustee. The owners of the New York then applied to this Court for a mandamus directing the district court to divide the damages to cargo. This was denied on the ground that, if the court below erred, the remedy was by appeal. Ex Parte Union Steamboat Company, 178 U. S. 317. Upon that intimation, an appeal was taken to the Circuit Court of Appeals for the Sixth Circuit, and after a motion to dismiss had been denied, 104 F. 561, the decree was affirmed, 108 F. 102. On a second certiorari, that decree was affirmed by this Court. 189 U. S. 189 U.S. 363. The New York paid the damages and brought this suit.

The ground of the last-mentioned decree was that the claim of the New York was not open, and the circuit court of appeals denied leave to amend the pleadings for the reason that the petitioner would be left free to assert its claim in an independent proceeding. 108 F. 107. In the present case, the district court followed this expression of the circuit court of appeals, and made a decree giving the petitioner one-half of the damages paid by it on account of cargo. The Circuit Court of Appeals for the Seventh Circuit, however,

Page 204 U. S. 225

before which the present case came on appeal, held that the whole matter was res judicata by the final decree in the former cause, and ordered the libel dismissed. 142 F. 9. Thereupon a third certiorari was granted by this Court, and the record is now before us.

The respondent set up three defenses, below and here. It argued that there was no jurisdiction in admiralty over the claim in its present form, that the petitioner had no case upon the merits, and that it was concluded by the former decree. The circuit court of appeals decided against the first two points before sustaining the third. We shall take them up in their order. The jurisdiction appears to us tolerably plain. If it be assumed that the right to contribution is an incident of the joint liability in admiralty, and is not res judicata, it would be a mere historical anomaly if the admiralty courts were not free to work out their own system, and to finish the adjustment of maritime rights and liabilities. Indeed, we imagine that this would not have been denied very strenuously had the question been raised by proper pleadings in connection with the original suit. But if the right is not barred by the former decree, it would be still more anomalous to send the parties to a different tribunal to secure that right at this stage. For the decree was correct as far as it went, and, by the hypothesis, might stop where it did without impairing the claim to contribution. That claim is of admiralty origin, and must be satisfied before complete justice is done. It cannot be that, because the admiralty has carried out a part of its theory of justice, it is prevented by that fact alone from carrying out the rest. See The Mariska, 107 F. 989.

On the merits also we have no great difficulty. The rule of the common law, even, that there is no contribution between wrongdoers, is subject to exception. Pollock, Torts, 7th ed.195, 196. Whatever its origin, the admiralty rule in this country is well known to be the other way. The North Star, 106 U. S. 17; The Sterling, 106 U. S. 647; Admiralty Rule, 59. Compare The Frankland L.R. Probate [1901] 161.

Page 204 U. S. 226

And it is established, as it logically follows, that the division of damages extends to what one of the parties pays to the owners of cargo on board the other. The Chattahoochee, 173 U. S. 540. The right to the division of the latter element does not stand on subrogation, but arises directly from the tort. The liability of the New York, under our practice, for all the damage to cargo was one of the consequences plainly to be foreseen, and, since the Conemaugh was answerable to the New York as a partial cause of the tort, its responsibility extended to all the manifest consequences for which, on the general ground that they were manifest, the New York could be held. Therefore the contract relations between the Conemaugh and her cargo have nothing to do with the case. See The Chattahoochee, 173 U. S. 540. More specifically, the last-named vessel's liability to the New York is not affected by provisions in the Conemaugh's bills of lading, giving her the benefit of insurance, and requiring notice of any claim for damage to be made in writing within thirty days, and suit to be brought within three months.

It only remains, then, to consider whether the petitioner is concluded by the former decree. If the liability of the Conemaugh arises, as we have said, out of the tort, then it is said to follow that the New York either is attempting to split up its cause of action or to recover in excess of a decree covering the case. It is true that the New York was the defendant in the former suit, but the damage to the New York was allowed for in the division. If the allowance was by way of recoupment, then it may be said that the New York, by asserting a counterclaim for its damages, bound itself to present its whole claim to the same extent as if it had brought the suit -- at least, until it had neutralized the claim made against it in the Conemaugh's own right. If the allowance was because division is the very form and condition of any claim for damage to vessels in case of mutual fault, The North Star, 106 U. S. 17; Stoomvaart Maatschappy Nederland v. Peninsular & Oriental Steam Navigation Co., 7 App.Cas. 795, 801, 806, and the mutual rights

Page 204 U. S. 227

cancel each other pro tanto as they arise, just as in an account current, as distinguished from set-off, then it might be contended that the claim in respect of the payment of damage to cargo is an item in the same account with the one for damage to the ship, and that a decree as to one involves a disposition of the other, and makes the whole matter res judicata. See The Manitoba, 122 U. S. 97, 122 U. S. 111.

But, whatever be the technical theory, the right of a defendant to a division of the damage to the vessels when both are in fault, and its contingent claim to partial indemnity for payment of damage to cargo, must be separable, from the necessity of to case. To illustrate. Suppose, in a case of collision, one vessel to be sued for damage to the other vessel alone. It could not set up the possibility that the cargo owners might sue sometime within six years and suspend the decree on the ground that otherwise the defendant might be barred from demanding indemnity in case the cargo owners should sue and succeed. If cargo owners should sue one or the other vessels after a division of the damages to the vessels themselves, it must be that the libellee would be free to require the other to exonerate or indemnify it to the same extent as if no such division had taken place. It would be impossible to do justice otherwise. As to the English law, see Stoomvaart Maatschappy Nederland v. Peninsular & Oriental Steam Navigation Co., 7 App.Cas. 795, 806.

If we are right, then this is a strong case for holding that the petitioner is not barred. It stands adjudicated that its pleadings did not open its present claim. They could not have done so, because, at that stage, the petitioner not having paid, it had no claim for indemnity, but only for exoneration. It was not bound to adopt the procedure permitted to it by Rule 59. It did ask leave to amend so as to protect its rights, but was met by the argument of the respondent and the opinion of the circuit court of appeals that it could bring a new suit. This Court said the same thing in affirming the decree against the New York. "If, as between her and the Conemaugh,

Page 204 U. S. 228

she have a claim for recoupment, the way is open to recover it." 189 U. S. 189 U.S. 368. The same proposition was implied in The Juniata, 93 U. S. 337, 93 U. S. 340. Every consideration leads us to adhere to this statement in the circumstances of the case at bar.

Decree of circuit court of appeals reversed.

Decree of district court affirmed.