Source: https://supreme.justia.com/cases/federal/us/350/124/
Timestamp: 2019-04-25 22:02:00+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 350 › Ryan Stevedoring Co., Inc. v. Pan-Atlantic Corp.
Ryan Stevedoring Co., Inc. v. Pan-Atlantic Steamship Corp.
Without signing a formal stevedoring contract or an express indemnity agreement, a stevedoring contractor agreed to perform all stevedoring operations required by a shipowner in the latter's coastwise service. Under this agreement, the contractor loaded a ship at Georgetown, S.C., with a mixed cargo, including rolls of pulpboard, and unloaded it in navigable water at a pier in Brooklyn, N.Y. During the unloading, a longshoreman employed by the contractor was injured by a roll of pulpboard which had been insufficiently secured when stored by the contractor in Georgetown. Under the Longshoremen's Act, the contractor's insurance carrier paid the longshoreman compensation and furnished him medical services, without any formal award by the Deputy Commissioner. Claiming that, because of unsafe stowage of the cargo, the ship was unseaworthy and that the shipowner had neglected to furnish him with a safe place to work, the longshoreman sued the shipowner and obtained a judgment for a much larger sum, from which the contractor's insurance carrier was to be reimbursed for the amount it had advanced to the longshoreman.
Held: on the shipowner's third-party complaint against the contractor, the shipowner was entitled to reimbursement from the contractor for the amount of the judgment against the shipowner. Pp. 350 U. S. 125-135.
1. Section 5 of the Longshoremen's and Harbor Workers' Compensation Act, which provides that the liability of an employer prescribed in § 4 "shall be exclusive and in place of all other liability of such employer to the employee," does not preclude assertion by the shipowner of the contractor's contractual liability to it, though the contractor was also the employer of the injured longshoreman. Pp. 350 U. S. 128-132.
2. Even in the absence of an express agreement of indemnity, the contractor was obligated to reimburse the shipowner for damages caused it by the contractor's breach of its contract to stow the cargo properly and safely. Pp. 350 U. S. 132-134.
3. Halcyon Lines v. Haenn Ship Corp., 342 U. S. 282, distinguished. P. 350 U. S. 133.
4. That the shipowner had an obligation to supervise the stowage and had a right to reject unsafe stowage and did not do so does not bar the shipowner's right to recover from the contractor any damage caused by the contractor's failure to stow the rolls safely. Pp. 350 U. S. 134-135.
This case presents two questions as to the liability of a stevedoring contractor to reimburse a shipowner for damages paid by the latter to one of the contractor's longshoremen on account of injuries received by him in the course of his employment on shipboard. 1. The first question is whether the Longshoremen's and Harbor Workers' Compensation Act [Footnote 1] precludes a shipowner from asserting such a liability. 2. The second is whether the liability exists where a contractor, without entering into an express agreement of indemnity, contracts to perform a shipowner's stevedoring operations and the longshoreman's injuries are caused by the contractor's unsafe stowage of the ship's cargo. For the reasons hereafter stated, we answer the first question in the negative and the second in the affirmative.
Victory in the American coastwise trade under a bareboat charter. As evidenced by letters, but without a formal stevedoring contract or an express indemnity agreement, respondent secured, for that year, the agreement of petitioner, Ryan Stevedoring Co., inc., an Alabama corporation, to perform all stevedoring operations required by respondent in its coastwise service. Pursuant to that contract, petitioner loaded the Canton Victory at Georgetown, South Carolina, with mixed cargo. This included pulpboard, such as is used in making corrugated paper and paper bags, shipped in rolls 4 feet wide and 3 to 5 feet long. Petitioner stowed some of these rolls side-by-side on the floor of Hatch No. 3 and "nested" others above them by placing the upper rolls in the troughs between the lower ones. To immobilize the rolls, it was necessary to secure or "chock" the bottom tier with wedges or with miscellaneous pieces of wood known as "dunnage." There is little evidence as to what took place when the rolls were stowed at Georgetown, but it was the uniform practice of petitioner's longshoremen to stow such cargo under the immediate direction of their hatch foreman, while respondent's cargo officers supervised the loading of the entire ship and had authority to reject unsafe stowage.
A few days later, on July 20, 1949, in navigable water at a pier in Brooklyn, New York, petitioner engaged in unloading these rolls. While one of petitioner's Brooklyn longshoremen, Frank Palazzolo, was working in Hatch No. 3, one roll, weighing about 3,200 pounds, broke loose from the others, struck him violently, and severely injured his left leg. There is no evidence that he was negligent. On the other hand, it appears that the rolls in Hatch No. 3 had been insufficiently secured when stowed by petitioner in Georgetown. This is established by the absence of proper wedges and dunnage holding the rolls in place at the time of the accident.
Petitioner's insurance carrier under the Longshoremen's Act paid Palazzolo $2,940 compensation and furnished him medical services costing $9,857.36, all without any formal award by the Deputy Commissioner. As permitted by § 33 of that Act, Palazzolo sued the respondent shipowner in the Supreme Court of New York. [Footnote 2] He claimed that the unsafe stowage of the cargo, which caused his injuries, established either the unseaworthiness of the ship or the shipowner's negligence in failing to furnish him with a safe place to work, or both. The shipowner removed the case to the United States District Court for the Eastern District of New York and filed a third-party complaint against petitioner. By stipulation, Palazzolo's case against the shipowner was tried to a jury, which returned a verdict in his favor for $75,000.
The District Court entered judgment on the jury verdict. From the above sum, petitioner's insurance carrier was to be reimbursed for the $12,797.36 it had advanced because of Palazzolo's injuries.
Also by stipulation, the shipowner's third-party complaint was submitted on the same record to the judge who had presided over Palazzolo's case. He dismissed the complaint. 111 F.Supp. 505. The Court of Appeals affirmed Palazzolo's judgment, but reversed the dismissal of the third-party complaint and directed that judgment be entered for the shipowner. 211 F.2d 277. Petitioner, the stevedoring contractor, contends that the order reversing the dismissal of the impleader suit is erroneous. Because of the wide application of the case and the conflicting views that have been expressed on the issues, we granted certiorari. 349 U.S. 813. The United States filed a brief as amicus curiae in support of the shipowner and took part in the oral argument. 348 U.S. 948. The judgment was affirmed by an equally divided Court, 349 U.S. 901, but the case was restored to the docket for reargument before a full Court, 349 U.S. 926.
1. The first question is whether the Longshoremen's Compensation Act precludes the assertion by a shipowner of a stevedoring contractor's liability to it, where the contractor is also the employer of the injured longshoreman.
parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death, except that if an employer fails to secure payment of compensation as required by this Act, an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under this Act, or to maintain an action at law or in admiralty for damages on account of such injury or death. . . ."
(Emphasis supplied.) 44 Stat. 1426, 33 U.S.C. § 905.
liability of the stevedoring contractor to its longshoreman, and to his kin, for damages on account of the longshoreman's injuries. At the same time, however, § 5 expressly preserves to each employee a right to recover damages against third persons. [Footnote 4] It thus preserves the right, which Palazzolo has exercised, to recover damages from the shipowner in the present case. The Act nowhere expressly excludes or limits a shipowner's right, as a third person, to insure itself against such a liability either by a bond of indemnity, or the contractor's own agreement to save the shipowner harmless. Petitioner's agreement in the instant case amounts to the latter, for, as will be shown, it is a contractual undertaking to stow the cargo "with reasonable safety," and thus to save the shipowner harmless from petitioner's failure to do so.
In the face of a formal bond of indemnity, this statute clearly does not cut off a shipowner's right to recover from a bonding company the reimbursement that the indemnitor, for good consideration, has expressly contracted to pay. Such a liability springs from an independent contractual right. It is not an action by or on behalf of the employee, and it is not one to recover damages "on account of" an employee's "injury or death." It is a simple action to recover, under a voluntary and self-sufficient contract, a sum measured by foreseeable damages occasioned to the shipowner by the injury or death of a longshoreman on its ship.
2. The other question is whether, in the absence of an express agreement of indemnity, a stevedoring contractor is obligated to reimburse a shipowner for damages caused it by the contractor's improper stowage of cargo.
upon contractual undertakings, would present the bald question whether the stevedoring contractor or the shipowner, because of their respective responsibilities for the unsafe stowage, should bear the ultimate burden of the injured longshoreman's judgment. That question has been widely discussed elsewhere in terms of the relative responsibility of the parties for the tort, and those discussions have dealt with concepts of primary and secondary or active and passive tortious conduct. [Footnote 7] Because respondent in the instant case relies entirely upon petitioner's contractual obligation, we do not meet the question of a noncontractual right of indemnity or of the relation of the Compensation Act to such a right.
The shipowner's claim here also is not a claim for contribution from a joint tortfeasor. Consequently, the considerations which led to the decision in Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U. S. 282, are not applicable. See American Mutual Liability Ins. Co. v. Matthews, 182 F.2d 322.
The Court of Appeals has stated that the liability of petitioner in this case is for the performance of its obligation to stow the rolls on board ship "in a reasonably safe manner." 211 F.2d at 279. That court also has affirmed the decision of the District Court which was based upon the verdict of the jury that petitioner's improper stowage of the rolls produced either the unseaworthiness of the ship or the hazardous working condition which is the basis for the shipowner's liability to Palazzolo.
44 Stat. 1424 et seq., as amended, 33 U.S.C. § 901 et seq.
"Sec. 33. (a) If on account of a disability or death for which compensation is payable under this Act the person entitled to such compensation determines that some person other than the employer is liable in damages, he may elect, by giving notice to the deputy commissioner in such manner as the Secretary [of Labor] may provide, to receive such compensation or to recover damages against such third person."
"(b) Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person."
"(i) Where the employer is insured and the insurance carrier has assumed the payment of the compensation, the insurance carrier shall be subrogated to all the rights of the employer under this section."
44 Stat. 1440, as amended, 33 U.S.C. § 933(a, b) and (i).
For procedure to secure an award of compensation, see § 19, 44 Stat. 1435-1436, as amended, 33 U.S.C. § 919.
A longshoreman, after accepting compensation payments from his employer without an award, may sue a third-party tortfeasor for his injuries. American Stevedores v. Porello, 330 U. S. 446, 330 U. S. 454-456. If the facts permit, he may recover from the shipowner for unseaworthiness, or for negligence, or both. Pope & Talbot v. Hawn, 346 U. S. 406.
In the instant case, the stevedoring contractor, however, has received a contractual quid pro quo from the shipowner for assuming responsibility for the proper performance of all of the latter's stevedoring requirements, including the discharge of foreseeable damages resulting to the shipowner from the contractor's improper performance of those requirements. See Restatement, Contracts, §§ 334, 330; Bethlehem Shipbuilding Corp. v. Joseph Gutradt Co., 10 F.2d 769; Mowbray v. Merryweather,  2 Q.B. 640 (C.A.).
See § 33(a) in note 2, supra.
"liability of an employer [for compensation] prescribed by the last preceding section shall be exclusive and in place of any other liability whatsoever, to such employee, his personal representatives, husband, parents, dependents or next of kin, or anyone otherwise entitled to recover damages at common law or otherwise on account of such injury or death . . . ."
McKinney's N.Y.Laws, Workmen's Compensation Law, § 11.
See Westchester Lighting Co. v. Westchester County Small Estates Corp., 278 N.Y. 175, 15 N.E.2d 567. Other state courts have reached comparable results as to exclusive liability clauses in their respective Compensation Acts. 2 Larson, Workmen's Compensation Law, §§ 76.00-76.44(a).
We do not reach the issue of the exclusionary effect of the Compensation Act upon a right of action of a shipowner under comparable circumstances without reliance upon an indemnity or service agreement of a stevedoring contractor. See Brown v. American-Hawaiian S.S. Co., 211 F.2d 16, 18; States S.S. Co. v. Rothschild International Stevedoring Co., 205 F.2d 253; Slattery v. Marra Bros., 186 F.2d 134 (N.J. statute); United States v. Rothschild International Stevedoring Co., 183 F.2d 181; American Mutual Liability Ins. Co. v. Matthews, 182 F.2d 322; American District Telegraph Co. v. Kittleson, 179 F.2d 946; McFall v. Compagnie Maritime Belge, 304 N.Y. 314, 107 N.E.2d 463. And see generally Weinstock, The Employer's Duty to Indemnify Shipowners for Damages Recovered by Harbor Workers, 103 U. of Pa.L.Rev. 321 (1954).
See Brown v. American-Hawaiian S.S. Co., supra; Crawford v. Pope & Talbot, supra; McFall v. Compagnie Maritime Belge, supra; Weinstock, The Employer's Duty to Indemnify Shipowners for Damages Recovered by Harbor Workers, supra.
See Union Stock Yards Co. of Omaha v. Chicago, B. & Q. R. Co., 196 U. S. 217; Brown v. American-Hawaiian S.S. Co., supra; Crawford v. Pope & Talbot, supra, 206 F.2d at 792-793; American Mutual Liability Ins. Co. v. Matthews, supra, 182 F.2d at 323-325; Rich v. United States, supra; Bethlehem Shipbuilding Corp. v. Joseph Gutradt Co., supra; Mowbray v. Merryweather, supra; Dunn v. Uvalde Asphalt Paving Co., 175 N.Y. 214, 67 N.E. 439.
See Berti v. Compagnie De Navigation Cyprien Fabre, 213 F.2d 397; Hastorf Contracting Co. v. Ocean Transportation Corp., 4 F.2d 583, aff'd, 4 F.2d 584; Mowbray v. Merryweather, supra; Boston Woven Hose & Rubber Co. v. Kendall, 178 Mass. 232, 59 N.E. 657.
MR. JUSTICE BLACK, with whom THE CHIEF JUSTICE, MR. JUSTICE DOUGLAS, and MR. JUSTICE CLARK concur, dissenting.
"exclusive and in place of all other liability of such employer to the employee . . . and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death. . . ."
I think the Court's holding today breaks promises the Act made both to employers and employees. My view requires a more detailed statement of the facts and circumstances of this case than appears in the Court's opinion.
"the stevedores and the chief officer and the mate on watch generally cooperate and work together in the stowage in the overall stowage of the cargo."
which they arrived at New York. And other evidence was sufficient to support a finding that the cargo arrived in New York unprotected by chocks.
These issues were properly submitted to the jury by the judge in his charge. He told the jury that it could not find the ship unseaworthy on account of the way in which the goods were unloaded in New York. The issue thus revolved around stowage in South Carolina which was actively supervised by the ship's officers. The court submitted to the jury the questions, among others, as to whether the ship had available for use proper equipment to stow these dangerous rolls, and whether the ship's officers were guilty of negligent loading and stowage in South Carolina. The jury gave Palazzolo a verdict for $75,000. The trial judge found, in deciding the shipowner's indemnity claim against the stevedore, that the ship's officer present at the stowage "did not properly perform his admitted duty to supervise the safe and careful loading of the vessel," although he had "authority to remedy the condition or halt the work." 111 F.Supp. 505, 507. He concluded from this and other findings [Footnote 2/2] that the ship and the stevedore were "joint tortfeasors," and therefore declined to order the stevedore to reimburse the shipowner.
negligence. [Footnote 2/3] The Court of Appeals justified imposing payment of the $75,000 verdict on the stevedore on the ground that Palazzolo's injury was due to the "sole," "primary," or "active" negligence of the stevedore's employees. But the court's suggestion that the injury could have been due to the "sole" negligence of the stevedore is answered by the part of the court's opinion holding that there was adequate evidence to support the jury and trial court findings that the shipowner itself was negligent. Use of the words "primary" and "active" seems to indicate that the Court of Appeals believed it should look at this cold record and find for itself whether the stevedore's employees or the ship's employees were guilty of this type of negligence. I do not agree that the Court of Appeals should make such findings. And if the Court of Appeals' cryptic statements about "sole," "active," and "primary" can be considered as upsetting any of the findings of the trial court, I think the Court of Appeals' action should be set aside as clearly erroneous. McAllister v. United States, 348 U. S. 19.
sometimes arise where two people commit a tort or wrong which hurts the same person. As between wrongdoers, the courts will, under some circumstances, impose the total liability on the "primary" or "active" wrongdoer, apparently meaning the wrongdoer the court deems to be the most negligent. But indemnity so imposed is plainly "on account of" the negligence of the wrongdoer or his employees. The Act expressly forbids such a recovery by "anyone" from a stevedoring company "on account" of an injury to one of its longshoremen. Plainly, common law indemnity should not be used to fasten such a liability on a stevedoring company. I suppose it is for this reason that the Court purports to find an actual contract to indemnify, and thus decides the case on an issue neither presented in the complaint nor considered by the trial court.
find that one person has agreed to indemnify another when the latter negligently hurts someone. [Footnote 2/7] Special caution should be used in construing contracts so as to impose indemnity liability on companies not engaged in the business of writing indemnity insurance.
work contracts so as to make them indemnity contracts? Surely, before this Court determines the existence of a contract and the scope of its coverage, the case should be sent back to the trial court so that these issues could be determined after a full hearing on the facts. The issues were not tried in the District Court and not tried in the Court of Appeals. The issues have never been tried. In American Stevedores v. Porello, 330 U. S. 446, we remanded a case to the trial court for a hearing on evidence as to the scope of a contract of indemnity even though it was written. Here, there is not even an oral contract to indemnify. Before creating a contract, it might be appropriate to follow the course we did in Porello. Or is the Court rejecting this phase of Porello? Cf. Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U. S. 282, 342 U. S. 284.
be the winner. Such is the state of affairs brought about by the Court's holding that this employer intended to make a contract which would subject him to the very liability that Congress had abolished.
the stevedoring company contracted to do some work on the ship; the result will be that the employer is wholly deprived of the protection of limited liability which the Act was intended to provide. And while this will be accomplished under the name of "contract," it will really by achieved because the Court has announced as an absolute principle of law that, without regard to whether a stevedoring company intends to agree to indemnify, it has so agreed if it agrees to do a job. Thus, by indirection, rights of longshoremen and their employers recognized by this Court in Sieracki, Halcyon, and Pope & Talbot are taken away. In effect, the Sieracki case is rejected.
44 Stat. 1424, as amended, 33 U.S.C. § 901 et seq.
The trial court also found that the ship's officer, "in the exercise of reasonable care, should have discovered and corrected" the defective stowage conditions. Had this been the only ship's negligence found, it might be material in considering the question of common law indemnity. But this Court relies on contractual indemnity.
Even though the question of unseaworthiness was also submitted to the jury, it depended wholly upon whether there was negligent stowage. Under the undisputed testimony of the ship's officer, the jury and judge had to find that the shipowner was guilty of negligence if the stevedore was. Moreover, if the shipowner failed to provide the proper gear in the way of chocks or lumber, the shipowner was guilty of negligence whether the stevedore was or not. In this case, therefore, the shipowner's negligence and unseaworthiness were one and the same thing. And if the shipowner failed to supply needed gear in the way of chocks or lumber, it would have been permissible to find that this was the "sole" cause of Palazzolo's injuries.
See Crowell v. Benson, 285 U. S. 22, 285 U. S. 37-42; New York Central R. Co. v. White, 243 U. S. 188, 243 U. S. 201-202. Cf. Ives v. South Buffalo R. Co., 201 N.Y. 271, 94 N.E. 431.
"Mr. Behrens [counsel for shipowner]: This right of indemnity alleged by Pan-Atlantic is a right of common law indemnity, rather than a contractual provision. My question is how to get such facts before your Honor."
"Your Honor, there was a motion for summary judgment in this case by Ryan, to which was annexed the exchange of correspondence between Ryan and Pan-Atlantic, which is a contract."
"Now, the question is whether those documents should now be put in evidence before your Honor, or whether your Honor will infer from the absence of any proof on the subject that there was no contractual indemnity."
"Mr. Schwartz [counsel for Ryan]: I think we can agree and stipulate between us that whatever contractual arrangement was made between Pan-Atlantic and Ryan did not contain any expressed provision for indemnity, and it is Mr. Behrens' position in this matter that his claim over is based solely upon an implied right of indemnity, as implied in law."
"Mr. Behrens: That is correct."
"Mr. Schwartz: I will stipulate that there is no contractual provision for indemnity."
"Mr. Behrens: And I will so stipulate, if that is satisfactory to your Honor."
See, e.g., 41 U. S. Bullus, 16 Pet. 528, 41 U. S. 534; Canal Co. v. Hill, 15 Wall. 94.
See, e.g., cases collected in Note, 175 A.L.R. 8, 29-32.

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