Source: https://supreme.justia.com/cases/federal/us/421/397/
Timestamp: 2019-04-21 08:15:43+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 421 › United States v. Reliable Transfer Co., Inc.
United States v. Reliable Transfer Co., Inc.
The admiralty rule of divided damages, whereby the property damage in a maritime collision or stranding is equally divided whenever two or more parties involved are found to be guilty of contributory fault, regardless of the relative degree of their fault, held replaced by a rule requiring liability for such damage to be allocated among the parties proportionately to the comparative degree of their fault, and to be allocated equally only when the parties are equally at fault or when it is not possible fairly to measure the comparative degree of their fault. Pp. 421 U. S. 401-411.
nation except ours have long since abandoned that rule, and now assess damages in such cases on the basis of proportionate fault when such an allocation can reasonably be made. In the present case, we are called upon to decide whether this country's admiralty rule of divided damages should be replaced by a rule requiring, when possible, the allocation of liability for damages in proportion to the relative fault of each party.
On a clear but windy December night in 1968, the Mary A. Whalen, a coastal tanker owned by the respondent Reliable Transfer Co., embarked from Constable Hook, N.J., for Island Park, N.Y. with a load of fuel oil. The voyage ended, instead, with the vessel stranded on a sand bar off Rockaway Point outside New York Harbor.
south of the breakwater and that he was heading her for the open sea. He was wrong. About a minute later, the light structure on the southern point of the breakwater came into view. Turning to avoid rocks visible ahead, the Whalen ran aground in the sand.
"The fault of the vessel was more egregious than the fault of the Coast Guard. Attempting to negotiate a turn to the east, in the narrow space between the bell buoy No. 4 and the shoals off Rockaway Point, the Captain set his course without knowing where he was. Obviously, he would not have found the breakwater light looming directly ahead of him within a minute after his change of course if he had not been north of the point where he believed he was."
"Equipped with look-out, chart, searchlight, radiotelephone, and radar, he made use of nothing except his own guesswork judgment. After . . . turning in a loop toward the north so as to pass astern of the tow, he should have made sure of his position before setting his new 73¡ course. The fact that a northwest gale blowing at 45 knots with eight to ten foot seas made it difficult to see emphasizes the need for caution, rather than excusing a turn into the unknown. . . . "
that, in this type of case, division of damages in proportion to the degree of fault may be more equitable,"
not until early in the 19th century that the divided damages rule as we know it emerged clearly in British admiralty law. In 1815, in The Woodrop-Sims, 2 Dods. 83, 165 Eng.Rep. 1422, Sir William Scott, later Lord Stowell, considered the various circumstances under which maritime collisions could occur and stated that division of damages was appropriate in those cases "where both parties are to blame." Id. at 85, 165 Eng.Rep. at 1423. In such cases, the total damages were to be "apportioned between" the parties "as having been occasioned by the fault of both of them." Ibid. Nine years later, the divided damages rule became settled in English admiralty law when the House of Lords, in a maritime collision case where both ships were at fault, reversed a decision of a Scottish court that had apportioned damages by degree of blame, and, relying on The Woodrop-Sims, ordered that the damages be divided equally. Hay v. Le Neve, 2 Shaw H.L. 395.
fault [Footnote 7] -- a fact that encourages transoceanic forum shopping. See G. Gilmore & C. Black, The Law of Admiralty 529 (2d ed.1975) (hereinafter Gilmore & Black).
"An equal division [of damages] in this case would be plainly unjust; they ought to be divided in some such proportion as five to one. And so they could be but for our obstinate cleaving to the ancient rule which has been abrogated by nearly all civilized nations."
in an earlier opinion for the Court of Appeals for the Second Circuit, he stated that "we have no power to divest ourselves of this vestigial relic; we can only go so far as to close our eyes to doubtful delinquencies." Oriental Trading & Transport Co. v. Gulf Oil Corp., 173 F.2d 108, 111. Some courts, even bolder, have simply ignored the rule. See J. Griffin, The American Law of Collision 564 (1949); Staring, supra at 341-342. Cf. The Margaret, 30 F.2d 923 (CA3).
It is no longer apparent, if it ever was, that this Solomonic division of damages serves to achieve even rough justice. [Footnote 11] An equal division of damages is a reasonably satisfactory result only where each vessel's fault is approximately equal and each vessel thus assumes a share of the collision damages in proportion to its share of the blame, or where proportionate degrees of fault cannot be measured and determined on a rational basis. The rule produces palpably unfair results in every other case. For example, where one ship's fault in causing a collision is relatively slight and her damages small, and where the second ship is grossly negligent and suffers extensive damage, the first ship must still make a substantial payment to the second.
"This result hardly commends itself to the sense of justice any more appealingly than does the common law doctrine of contributory negligence. . . ."
19 Wall. 125, whereby a ship's relatively minor statutory violation will require her to bear half the collision damage unless she can satisfy the heavy burden of showing "not merely that her fault might not have been one of the causes, or that it probably was not, but that it could not have been." Id. at 86 U. S. 136 (emphasis added). See O/Y Finlayson-Forssa A/B v. Pan Atlantic S.S. Corp., 259 F.2d 11, 22 (CA5); The New York Marine No. 10, 109 F.2d 564, 566 (CA2). See also Griffin, supra, § 202.
sop to Cerberus. It is no doubt better than nothing; but it is inadequate to reach the heart of the matter, and constitutes a constant temptation to courts to avoid a decision on the merits."
National Bulk Carriers v. United States, 183 F.2d 405, 410 (CA2) (L. Hand, J., dissenting).
The divided damages rule has been said to be justified by the difficulty of determining comparative degrees of negligence when both parties are concededly guilty of contributing fault. The Max Morris, 137 U. S. 1, 137 U. S. 12. Although there is some force in this argument, it cannot justify an equal division of damages in every case of collision based on mutual fault. When it is impossible fairly to allocate degrees of fault, the division of damages equally between wrongdoing parties is an equitable solution. But the rule is unnecessarily crude and inequitable in a case, like this one, where an allocation of disparate proportional fault has been made. Potential problems of proof in some cases hardly require adherence to an archaic and unfair rule in all cases. Every other major maritime nation has evidently been able to apply a rule of comparative negligence without serious problems, see Mole & Wilson, A Study of Comparative Negligence, 17 Corn.L.Q. 333, 346 (1932); In re Adams' Petition, 125 F.Supp. 110, 114 (SDNY), aff'd, 237 F.2d 884 (CA2), and, in our own admiralty law, a rule of comparative negligence has long been applied with no untoward difficulties in personal injury actions. See, e.g., Pope & Talbot, Inc. v. Hawn, 346 U. S. 406, 346 U. S. 409. See also Merchant Marine (Jones) Act, 38 Stat. 1185, as amended, 41 Stat. 1007, 46 U.S.C. § 688; Death on the High Seas Act, 41 Stat. 537, 46 U.S.C. § 766.
both parties can readily agree to divide the damages -- thus avoiding the expense and delay of prolonged litigation and the concomitant burden on the courts. It would be far more difficult, it is argued, or the parties to agree on who was more at fault and to apportion damages accordingly. But the argument is hardly persuasive. For if the fault of the two parties is markedly disproportionate, it is in the interest of the slightly negligent party to litigate the controversy in the hope that the major-minor fault rule may eventually persuade a court to absolve it of all liability. And if, on the other hand, it appears, after a realistic assessment of the situation, that the fault of both parties is roughly equal, then there is no reason why a rule that apportions damages would be any less likely to induce a settlement than a rule that always divides damages equally. Experience with comparative negligence in the personal injury area teaches that a rule of fairness in court will produce fair out-of-court settlements. [Footnote 13] But even if this argument were more persuasive than it is, it could hardly be accepted. For, at bottom, it asks us to continue the operation of an archaic rule because its facile application out of court yields quick, though inequitable, settlements, and relieves the courts of some litigation. Congestion in the courts cannot justify a legal rule that produces unjust results in litigation simply to encourage speedy out-of-court accommodations.
"[T]here is no reason why the Supreme Court cannot at this late date 'confess error' and adopt the proportional fault doctrine without Congressional action. The resolution to follow the divided damages rule, taken 120 years ago, rested not on overwhelming authority, but on judgments of fact and of fairness which may have been tenable then, but are hardly so today. No 'vested rights,' in theory or fact, have intervened. The regard for 'settled expectation' which is the heart-reason of . . . stare decisis . . . can have no relevance in respect to such a rule; the concept of 'settled expectation' would be reduced to an absurdity were it to be applied to a rule of damages for negligent collision. The abrogation of the rule would not, it seems, produce any disharmony with other branches of the maritime law, general or statutory."
pointed out that the result it works has too often been precisely the opposite of what the Court sought to achieve in The Schooner Catharine -- the "just and equitable" allocation of damages. And worldwide experience has taught that that goal can be more nearly realized by a standard that allocates liability for damages according to comparative fault whenever possible.
We hold that, when two or more parties have contributed by their fault to cause property damage in a maritime collision or stranding, liability for such damage is to be allocated among the parties proportionately to the comparative degree of their fault, and that liability for such damages is to be allocated equally only when the parties are equally at fault or when it is not possible fairly to measure the comparative degree of their fault.
"It is undoubtedly the rule in admiralty that, where both vessels are in fault, the sums representing the damage sustained by each must be added together and the aggregate divided between the two. This is, in effect, deducting the lesser from the greater and dividing the remainder. . . . If one in fault has sustained no injury, it is liable for half the damages sustained by the other, though that other was also in fault."
"[A]according to the general maritime law, in cases of collision occurring by the fault of both parties, the entire damage to both ships is added together in one common mass and equally divided between them, and thereupon arises a liability of one party to pay to the other such sum as is necessary to equalize the burden."
See also, e.g., White Oak Transportation Co. v. Boston, Cape Cod & New York Canal Co., 258 U. S. 341; The Eugene F. Moran, 212 U. S. 466.
It has long been settled that the divided damages rule applies not only in cases of collision between two vessels, but also in cases, like this one, where a vessel partly at fault is damaged in collision or grounding because of the mutual contributing fault of a nonvessel party. Atlee v. Pocket Co., 21 Wall. 389 (barge struck pier because of mutual fault of barge and of pier owner); White Oak Transportation Co. v. Boston, Cape Cod & New York Canal Co., supra, (steamship ran aground in canal because of joint negligence of steamship and canal company). See also G. Gilmore & C. Black, The Law of Admiralty § 7-17, pp. 522-523 (2d ed.1975).
The Government's petition for certiorari presented the single question whether the admiralty rule of equally divided damages should be replaced by the rule of damages in proportion to fault. The respondent did not file a cross-petition for certiorari, but it now argues that the Government was solely at fault, and requests an increase of the judgment in its favor to the full amount of its damages. However, absent a cross-petition for certiorari, the respondent may not now challenge the judgment of the Court of Appeals to enlarge its rights thereunder. Morley Constr. Co. v. Maryland Casualty Co., 300 U. S. 185, 300 U. S. 190; United States v. American Railway Express Co., 265 U. S. 425, 265 U. S. 435. Moreover, even if it could be argued that respondent's challenge of the factual findings could be taken as an argument in support of the judgment, see Stern, When to Cross-Appeal or Cross-Petition -- Certainty or Confusion?, 87 Harv.L.Rev. 763, 774 (1974), the findings of fact with respect to comparative negligence were concurred in by both the District Court and the Court of Appeals, and the respondent could not in this case meet its heavy burden under the "two court rule." Graver Mfg. Co. v. Linde Co., 336 U. S. 271, 336 U. S. 275. See Berenyi v. Immigration Director, 385 U. S. 630, 385 U. S. 635.
Most commentators have traced the rule back to Article XIV of the Laws of Oleron, promulgated about A. D. 1150, which provided that, in cases of collision between a ship under way and another at anchor, the damages would be divided equally between the owners of the two vessels, so long as the captain and crew of the ship under way swore under oath that the collision was accidental. See, e.g., 4 R. Marsden, British Shipping Laws, Collisions at Sea § 119 (11th ed.1961). See also Staring, Contribution and Division of Damages in Admiralty and Maritime Cases, 45 Calif.L.Rev. 304 (1957).
Other maritime nations enacted provisions similar to Article XIV during the same period, with slight variations in the scope of the rule and the principle of division. Marsden, supra, §§ 119-125.
"The principle . . . underlying the rule seems to have been that collision was a peril of the sea -- a common misfortune to be borne by all parties, either equally or rateably according to their interests at risk."
The Court has acknowledged the continued existence of the divided damages rule in at least two recent cases. See Weyerhaeuser S.S. Co. v. United States, 372 U. S. 597, 372 U. S. 603; Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U. S. 282, 342 U. S. 284. But in neither case did the Court have occasion to reexamine the rule or to appraise the validity of its underpinnings or the propriety of its present application. The Court granted certiorari in Union Oil Co. v. The San Jacinto, 409 U. S. 140, to reconsider the divided damages rule, but did not reach the issue because of our conclusion that one of the vessels involved in that case was totally free of contributing fault.
Maritime Conventions Act, 1911, 1 & 2 Geo. 5, c. 57, § 1.
"If two or more vessels are in fault, the liability of each vessel shall be in proportion to the degree of the faults respectively committed. Provided that, if, having regard to the circumstances, it is not possible to establish the degree of the respective faults, or if it appears that the faults are equal, the liability shall be apportioned equally."
We are informed by the Government that among the jurisdictions that have ratified or adhere to the Brussels Convention on Collision Liability are: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Egypt, Finland, France, Germany, Great Britain, Greece, Haiti, Hungary, Iceland, India, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Nicaragua, Norway, Poland, Portugal, Romania, Sweden, Switzerland, Turkey, U.S.S.R., Uruguay, and Yugoslavia. See 6 A. Knauth & C. Knauth, Benedict on Admiralty 38-39 (7th ed.1969). See also J. Griffin, The American Law of Collision 857 (1949); Staring, supra, n 3, at 340-341; Tank Barge Hygrade v. The Gatco New Jersey, 250 F.2d 485, 488 (CA3).
Ahlgren v. Red Star Towing & Transp. Co., 214 F.2d 618, 620 (CA2).
Marine Fuel Transfer Corp. v. The Ruth, 231 F.2d 319, 321 (CA2).
Tank Barge Hygrade v. The Gatco New Jersey, supra at 488. See also Mystic S.S. Corp. v. M/S Antonio Ferraz, 498 F.2d 538, 539 n. 1 (CA2); Petition of Oskar Tiedemann & Co., 289 F.2d 237, 241-242 (CA3); In re Adams' Petition, 237 F.2d 884, 887 (CA2); Luckenbach S.S. Co. v. United States, 157 F.2d 250, 252 (CA2).
It is difficult to imagine any manner in which the divided damages rule would be more likely to "induce care and vigilance" than a comparative negligence rule that also penalizes wrongdoing, but in proportion to measure of fault. A rule that divides damages by degree of fault would seem better designed to induce care than the rule of equally divided damages, because it imposes the strongest deterrent upon the wrongful behavior that is most likely to harm others.
"Where fault on the part of one vessel is established by uncontradicted testimony, and such fault is, of itself, sufficient to account for the disaster, it is not enough for such vessel to raise a doubt with regard to the management of the other vessel. There is some presumption at least adverse to its claim, and any reasonable doubt with regard to the propriety of the conduct of such other vessel should be resolved in its favor."
See also The Victory & The Plymothian, 168 U. S. 410; The Umbria, 166 U. S. 404; The Oregon, 158 U. S. 186; The Ludvig Holberg, 157 U. S. 60.
The rule of comparative negligence applicable to personal injury actions in our maritime law, see the Jones Act, 46 U.S.C. § 688; Death on the High Seas Act, 46 U.S.C. § 766, does not appear to discourage the negotiation of settlements in such litigation. It has been reported, for example, that of the marine personal injury cases involving a federal question that were terminated in fiscal year 1974, only 9.6% ever reached trial. 1974 Proceedings of the Judicial Conference of the United States and Annual Report of the Director of the Administrative Office of the United States Courts, Table C4, p. 416.
The respondent also relies on the fact that the Senate has twice failed to ratify the Brussels Convention, with its proportional fault rule. It is urged that this inaction indicates "grave doubt" in Congress that rejection of the divided damages rule will further justice. But even if we could find guidance in such "negative legislation," Moragne v. States Marine Lines, 398 U. S. 375, 398 U. S. 405 n. 17, it appears that the Senate took no action with respect to the Convention not because of opposition to a proportional fault rule, but because of the Convention's poor translation and the opposition of cargo interests to the provision which would prevent cargo from recovering in full from the noncarrying vessel by eliminating joint and several liability of vessels for cargo damage. See H. Baer, Admiralty Law of the Supreme Court 414-415 (2d ed.1969); Staring, supra, n 3, at 343. See also Comment, 64 Yale L.J. 878 (1955).
This Court, in other appropriate contexts, has not hesitated to overrule an earlier decision and settle a matter of continuing concern, even though relief might have been obtained by legislation. See Burnet v. Coronado Oil & Gas Co., 285 U. S. 393, 285 U. S. 406 n. 1 (Brandeis, J., dissenting) (collecting cases).
See also Donovan & Ray, Mutual Fault -- Half-Damage Rule -- A Critical Analysis, 41 Ins.Coun.J. 395 (1974); Allbritton, Division of Damages in Admiralty -- A Rising Tide of Confusion, 2 J. of Maritime Law and Commerce 323 (1971); Jackson, The Archaic Rule of Dividing Damages in Marine Collisions, 19 Ala.L.Rev. 263 (1967); Staring, supra, n 3, at 304; Mole & Wilson, A Study of Comparative Negligence, 17 Corn.L.Q. 333 (1932); and Huger, The Proportional Damage Rule in Collisions at Sea, 13 Corn.L.Q. 531 (1928).

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