1. Where a shipowner sues in admiralty to limit his liability
from negligent management of his vessel to the value of the vessel
and pending freight, the proceeding does not necessarily terminate
if his prayer is denied, but the Court may thereupon proceed to
adjudicate all the claims coming from the accident, whether
independently cognizable in admiralty or not, after the manner of a
court of equity, and render judgment both
in rem and
against the owner
in personam. P.
273 U. S.
213.
2. A stipulation
ad interim in such proceedings takes
the place of the vessel and freight, and even when the shipowner's
application to limit liability is denied, the stipulator may be
required to pay their value into court for application to allowed
claims and costs. P.
273 U. S.
218.
3 F 2d 923 affirmed.
Page 273 U. S. 208
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.
Page 273 U. S. 211
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
The National Oil Transport Company, the owner of wooden oil tank
barge
Bolikow, filed a libel in the United States District
Court for the Southern District of Texas against the Southern
Pacific Company, alleging that the
Bolikow, made fast to a
dock in the harbor of the City of Galveston, was laden with a cargo
of crude oil, from which a large part had been discharged; that an
explosion took place in one of her tanks, causing fire; that the
El Occidente, a steamer of the Southern Pacific Company,
was injured by the fire; that the value of the barge after the
explosion and fire was $250, and her pending freight at the time
did not exceed $11,076.85; that the damage to the
Occidente was due not to the
Bolikow, but to her
own negligent management and the lack of power of the tug which
attempted to take her to a safe place; that the claims of the
owners of the
Occidente were in excess of $484,000, and
there were claims by persons on the barge for death and injuries
from the fire, amounting to $50,000 in one case and $15,000 in
another. The owner contested his liability and that of its barge,
Bolikow, to any extent whatever, but, in case its
liability was established, claimed and sought the benefit of the
statutory limitation of its liability. R.S. §§ 4283, 4284, and
4285.
Pursuant to the court's order, the National Oil Transport
Company, as principal, and the Hartford Accident & Indemnity
Company, as surety, executed an
ad interim stipulation
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 barge
Bolikow, executed
Page 273 U. S. 212
in due form of law for the value of the transport company's
interest in the barge and her pending freight, with 6 percent
interest thereon from December 23, 1920, within 10 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, the
ad interim
undertaking 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 reappraisal 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
said
ad interim stipulation 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 said
ad interim stipulation 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
Page 273 U. S. 213
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 her pending 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
percent interest from December 23, 1920, to be applied in payment
of the costs of court, the remainder to be prorated 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 a
res in court, that the proceeding was no longer one
in
rem, and that suits for the claims against the shipowner 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 in
The Titanic, 204 F 295, and in
The
Virginia, 266 F. 437, 439.
See also Dowdell v. U.S.
District Court, 139 F. 444;
In re Jeremiah Smith &
Sons, 193 F. 395;
The Santa Rosa, 249 F. 160.
The history and proper construction of the Limitation of
Liability Act of 1851, 9 Stat. 635, now embodied in
Page 273 U. S. 214
Revised Statutes, §§ 4282 to 4287, are shown in a series of
cases in this Court, the chief of which is
Norwich
Co. v. Wright, 13 Wall. 104. Further consideration
to this subject was given by the Court in
The Benefactor,
103 U. S. 239; in
Providence & New York Steamship Co. v. Hill Manufacturing
Co., 109 U. S. 578; in
The City of Norwich, 118 U. S. 468,
118 U. S. 503;
in
The Scotland, 118 U. S. 507; in
Butler v. Boston & Savannah Steamship Co.,
130 U. S. 527, and
in
In Re Morrison, 147 U. S. 14,
147 U. S. 34; in
The Albert Dumois, 177 U. S. 240; in
The Hamilton, 207 U. S. 398, and
in
La 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 ships 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 shipowner, 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,
Norwich v.
Wright, 13 Wall. 104; that ,to effect the purpose
of the statute, admiralty rules Nos. 54, 55, 56, and 57 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 to
Page 273 U. S. 215
goods 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. Hill
Manufacturing Co., 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 judgment
in personam against the owner, as
well as judgment
in rem against the
res, or the
substituted fund,
City of Norwich, 118 U.
S. 468,
118 U. S. 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,
207 U. S. 406,
and that they may include damages from a collision, from personal
injuries,
Butler v. 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,
210 U. S.
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 within
Page 273 U. S. 216
it, 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.
Dowdell v.
United States District Court, 139 F. 444, 445. The proceeding
partakes in a way of the features of a bill to enjoin the
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 proceedings
in
rem against the ship, as well as to proceedings
in
personam against the owner, the limitation extending to the
owner's property as well as to his person.
The City of
Norwich, 118 U. S. 468,
118 U. S.
503.
With this general view of the statute, we come to the contention
of the petitioner in this case. He says that 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 or
res, 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 helpless
Page 273 U. S. 217
as 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 attaches
in
rem and
in personam by reason of the custody of the
res put 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 the
res
and by judgment
in personam against 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
cannot make his case of personal immunity. 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 the
res,
and by judgments
in personam for 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 the
whole issues and award complete relief, even where the rights of
parties are strictly legal and the final remedy granted is of the
kind
Page 273 U. S. 218
which might be conferred by a court of law. Pomeroy's Equity
Jurisdiction (4th ed.) §§ 181 and 231;
United States v. Union
Pacific Railway Company, 160 U. S. 1,
160 U. S. 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 completely to dispose of the
cause before him, does not usually apply in an admiralty suit.
Grant v.
Poillon, 20 How. 162;
Turner v. Beacham,
Taney's Reports 583, Fed.Cas. No. 14,252;
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 Steamship Co. 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 nonadmiralty claims the
jurisdiction to fulfill 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 an
ad interim stipulation 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 in
The Palmyra,
12 Wheat. 10, 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 of
Page 273 U. S. 219
all 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 of the 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 subject addressed to its sound
discretion."
In
The Oregon, 158 U. S. 186,
158 U. S. 209,
after reference to
The Palmyra and 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 libeled and sold, the
proceeds shall represent the same for the purpose of these rules.
In all the case 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 273 U. S. 220
where 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 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.