Source: https://www.law.cornell.edu/supremecourt/text/343/236
Timestamp: 2016-12-08 10:24:49
Document Index: 627312761

Matched Legal Cases: ['§ 3', '§ 4', '§ 190', '§ 1300', '§ 3', '§ 192', '§ 1304', '§ 1300', '§ 1304']

UNITED STATES v. ATLANTIC MUT. INS. CO. et al. | US Law | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews UNITED STATES v. ATLANTIC MUT. INS. CO. et al.
343 U.S. 236 (72 S.Ct. 666, 96 L.Ed. 907)
UNITED STATES v. ATLANTIC MUT. INS. CO. et al.
Argued: and Submitted March 7, 1952.
[HTML] Mr. James L. Morrisson, Washington, D.C., for petitioner.
(c) Because of § 3 of the Harter Act
and § 4(2) of the Carriage of Goods by Sea Act,
(f) The bill of lading issued by the Bacon to the cargo owners contained a 'Both-to-Blame' clause.
This clause, if valid, requires the cargo owners to indemnify the carrier Bacon for any amounts the Bacon loses because damages recovered by the cargo owners from the Belgium are included in the aggregate damages divided between the two ships.
and has acquired the force and precision of a legislative enactment. Considering the relationship of the rule to the Harter Act, this Court said in 1901 that 'in view of the well-settled nature of the general rule at the time the statute was adopted, it must result that legislative approval was by clear implication given to the general rule as then existing in all cases where it was not changed.' The Kensington, 183 U.S. 263, 268269, 22 S.Ct. 102, 104, 46 L.Ed. 190. Our question therefore is whether the language of the Harter Act, substantially reenacted in the Carriage of Goods by Sea Act, has carved out a special statutory exception to the general rule so as to permit a carrier to deprive its cargo owners of a part of the fruits of any judgment they obtain in a direct action against a noncarrying vessel that contributes to a collision.
Prior to the passage of the Harter Act in 1893, 46 U.S.C.A. § 190 et seq., cargo damages incurred in a both-to-blame collision could be recovered in full from either ship. The Atlas, 93 U.S. 302, 23 L.Ed. 863. The Harter Act, under some circumstances, took away the right of the cargo owner to sue his own carrier for cargo damages caused by the negligent navigation of the carrier's servants or agents. It did not deprive the cargo owner of his tort action against the noncarrying ship. The Chattahoochee, 173 U.S. 540, 549550, 19 S.Ct. 491, 494, 495, 43 L.Ed. 801. Nor did the Harter Act go so far as to insulate the carrier from responsibility to another vessel for physical damages caused to the ship by negligent navigation of the carrier's servants or agents. In The Delaware, 161 U.S. 459, 471, 474, 16 S.Ct. 516, 522, 523, 40 L.Ed. 771, this Court declined to give the Harter Act such a broad interpretation even though the language itself, if 'broadly construed' and considered alone, would have justified such an interpretation. In addition, the Harter Act does not exonerate the carrier from its obligation to share with the noncarrier one-half the damages paid by the noncarrier to the cargo owners. The Chattahoochee, supra, 173 U.S. at pages 551552, 19 S.Ct. at page 495; see also Aktieselskabet Cuzco v. The Sucarseco, 294 U.S. 394, 401402, 55 S.Ct. 467, 470, 79 L.Ed. 942.
Apparently it was not until about forty years after the passage of the Harter Act that shipowers first attempted by stipulation to deprive cargo owners of a part of their recovery against noncarrying ships. See The W. W. Bruce, D.C., 14 F.Supp. 894, reversed on other grounds, 2 Cir., 94 F.2d 834. The present effort of shipowners appears to date from 1937 when the North Atlantic Freight Conference adpted the 'Both-to-Blame' clause.
So far as appears, this is the first test of the legality of the clause that has appeared in the courts. When Congress passed the Carriage of Goods by Sea Act in 1936, 46 U.S.C.A. § 1300 et seq., it indicated no surpose to bring about a change in the long-existing relationships and obligations between carriers and shippers which would be relevant to the validity of the 'Both-to-Blame' clause. At that time all interested groups such as cargo owners, shipowners, and the representatives of interested insurance companies were before the congressional committees.
Although petitioner and respondents both appear to find comfort in the language and the hearings of the 1936 Act, nothing in either persuades us that Congress intended to alter the Harter Act in any respect material to this controversy.
Here, once more, 'we think that legislative consideration and action can best bring about a fair accommodation of the diverse but related interests'
of the varied groups who would be affected by permitting carriers to deviate from the controlling rule that without congressional authority they cannot stipulate against their own negligence or that of their agents or servants. If that rule is to be changed, the Congress, not the shipowners, should change it.
Only a few weeks ago this Court reversed a unanimous opinion of the Court of Appeals for the Fourth Circuit, Lilly v. C.I.R., 188 F.2d 269, which had held opposed to public policy, agreements whereby retailers of eyeglasses turned over a portion of the purchase price to the oculist who referred the customer to them. In so doing, 'we voice(d) no approval of the business ethics or public policy involved' in the agreements. Lilly v. C.I.R., 343 U.S. 90, 97, 72 S.Ct. 497, 501. This refusal to make our private views of right into the legal standards for the activities of men of affairs has increasingly characterized our decisions in the vague and shifting area of agreements challenged as unenforceable because offensive to what must be deemed to be legally controlling policy. 'In the absence of a plain indication of that (dominant public) policy through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, this Court should not assume to declare contracts of the War Department contrary to public policy.' Muschany v. United States, 324 U.S. 49, 6667, 65 S.Ct. 442, 451, 89 L.Ed. 744. No more unrestrained justification warrants courts to strike down private business agreements. Jedged by such a standard, the agreements before us should be enforced.
Before 1893, when the Harter Act
was passed, the obligations of seagoing carriers with respect to passengers and cargo were defined by this Court in the exercise of its admiralty and maritime jurisdiction from case to case. Toward cargo the ocean carrier stood in the relation of an insurer, liable for any damage save that caused by act of God; and to passengers it owed the duty of highest care. Only by holding carriers to this mark was it thought that safety in operation could in achieved and undue imposition by carriers eliminated.
The carriers sought to avoid these obligations by special contracts or stipulations in bills of lading, relieving them of liabilities which they would incur under the rules laid down by the courts in the absence of such agreements. Although the courts upheld some such efforts, they reserved the right to refuse to enforce contractual exemptions from liability which trenched upon judicial notions of public policy.
The most important limit thus set to the power of the carrier to contract out of his commonlaw liability was the rule that courts would strike down any stipulation which relieved the carrier for hire from liability for damage caused by its own negligence. Applied first by this Court to the railroads, New York Central R. C. v. Lockwood, 17 Wall. 357, 21 L.Ed. 627, the doctrine was extended to carriers by sea a few years later in Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 129 U.S. 397, 9 S.Ct. 469, 32 L.Ed. 788. Underlying the decision was the premise that such an agreement, if enforced, would tend to relax the vigilance and care in seamanship which the threat of liability encouraged. See New York Central R. Co. v. Lockwood, supra, 17 Wall. at pages 371, 377378, 21 L.Ed. 627.
The judge's function and responsibility become otherwise once the legislature has formulated public policy. Courts are then no longer at large. They must carry out the defined policy and disregard their own determination of what the public good demands. See Twin City Pipe Line Co. v. Harding Glass Co., 283 U.S. 353, 357, 51 S.Ct. 476, 477, 75 L.Ed. 1112. By the Harter Act, Congress supplanted the judicial view of public policy with its own ideas. The legislation, as is so often the case, represents a compromise among competing interests. The carriers were relieved of their judicially imposed insurers' liability. In return they were required to forego the possibility of avoiding by contract certain specified obligations. Finally, if those obligations were in fact performed,
recovery against the carrier for damages to cargo due to faulty navigation was altogether disallowed. This provision, embodied in § 3 of the Harter Act,
necessarily expressed a rejection of the judicially conceived premise as to public policy which was the foundation of the decisions which antedated legislation, namely, that liability for negligent navigation was a necessary spur to the carrier's exercise of care. Since that premise has been discarded by Congress, no justification remains for us to revive it as a basis for striking down the agreement here in question. 'The Legislature has the power to decide what the policy of the law shall be, and if it has intimated its will, however indirectly, that will should be recognized and obeyed. The major premise of the conclusion expressed in a statute, the change of policy that induces the enactment, may not be set out in terms, but it is not an adequate discharge of duty for courts to say: We see what you are driving at, but you have not said it, and therefore we shall go on as before.' Johnson v. United States, 1 Cir., 163 F. 30, 32, 18 L.R.A.,N.S., 1194, per Holmes, J.; see Landis, Statutes and the Sources of Law, in Harvard Legal Essays, 213.
To be sure, the Harter Act did not in terms prescribe that the carrier should have recovery over against cargo for the amount of its liability to a non-carrying ship, attributable to payments made by the non-carrier for damage to cargo in a collision for which both vessels were to blame. Hence we held in The Chattahoochee, 173 U.S. 540, 19 S.Ct. 491, 43 L.Ed. 801, that no such recovery was available to a carrier by mere force of the Act. Similarly, and in the same period shortly after the passage of the Harter Act, we held that since the Act did not specify that the carrier should participate in a general average
when the peril to which it related was the result of the carrier's faulty navigation, no such participation could be had if the carrier had not stipulated for it. The Irrawaddy, 171 U.S. 187, 18 S.Ct. 831, 43 L.Ed. 130. But when a carrier did contract for such participation, the force of the Harter Act required this Court to sustain the stipulation. The Jason, 225 U.S. 32, 32 S.Ct. 560, 56 L.Ed. 969.
'Instead of merely sanctioning covenants and agreements limiting (the shipowner's) liability, Congress went further and rendered such agreements unnecessary by repealing the liability itself, declaring that if the shipowner should exercise due diligence to make the vessel in all respects seaworthy, and properly manned, equipped, and supplied, neither the vessel, her owner or owners, etc., should be responsible for damage or loss resulting from faults or errors in navigation or in the management of the vessel, etc., etc. The antithesis is worth noting. Congress says to the shipowner: 'In certain respects you shall not be relieved from the responsibilities incident to your public occupation as a common carrier, although the cargo owners agree that you shall be relieved; in certain other respects (provided you fulfil conditions specified) you shall be relieved from responsibility even without a stipulation from the owners of cargo." The Jason, supra, 225 U.S. at pages 5051, 32 S.Ct. at page 562.
The present case bears exactly the same relation to The Chattahoochee that The Jason bore to The Irrawaddy. To revive notions of public policy which Congress rejected in 1893, disregards the appropriate considerations that governed application of the Harter Act in the earlier decisions.
To derive from a statute, which relieves a ship entirely of liability to cargo when the ship is wholly to blame for the loss, an implied restriction against a voluntary arrangement for relief from liability when the ship is only half to blame, is surely an odd use to which to put such a statute. When this Court does fashion a rule of public policy it ought to be less perverse and illogical than that in its operation.
It is suggested, however, that the real meaning of the Harter Act is that carriers are remitted to Congress for whatever immunities they were to be granted. That is a most doctrinaire view to take of the legislation, and The Jason, supra, disposes of the notion.
What Congress did was to legislate generally about the relations between carrier and cargo in seagoing commerce. Generally, but not comprehensively as though it formulated a maritime code excluding all consensual arrangements within the industry. That legislation 'indicate(s) or require(s) as its justification a change in the policy of the law, although it expresses that change only in the specific cases most likely to occur to the mind.' Johnson v. United States, supra, 163 F. at page 32. We should heed the admonition of Mr. Justice Holmes 'that courts in dealing with statutes sometimes have been too slow to recognize that statutes even when in terms covering only particular cases may imply a policy different from that of the common law, and therefore may exclude a reference to the common law for the purpose of limiting their scope.' Panama R. Co. v. Rock, 266 U.S. 209, 215216, 45 S.Ct. 58, 60, 69 L.Ed. 250, Holmes, J., with Taft, C.J., McKenna and Brandeis, JJ., dissenting. This is such a statute. I would recognize that the Congressional pronouncement of public policywhen it exempted carriers from liability for faulty navigationprecludes our striking down the clause here in issue.
27 Stat. 445, 46 U.S.C. 192, 46 U.S.C.A. § 192. This section provides that if due diligence is exercised by the shipowner in making the ship seaworthy and properly manned, equipped, and supplied, then 'neither the vessel, her owner or owners, agent, or charterers, shall become or be held responsible for damage or loss resulting from faults or errors in navigation or in the management of said vessel * * *.'
49 Stat. 1210, 46 U.S.C. 1304(2), 46 U.S.C.A. § 1304(2). This section provides that 'neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship; * * *.'
See, e.g., Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 1889, 129 U.S. 397, 438444, 9 S.Ct. 469, 470473, 32 L.Ed. 788; Knott v. Botany Worsted Mills, 1900, 179 U.S. 69, 71, 21 S.Ct. 30, 45 L.Ed. 90; New York Central R. Co. v. Lockwood, 1873, 17 Wall. 357, 21 L.Ed. 627; Boston & Maine R.R. v. Piper, 1918, 246 U.S. 439, 445, 38 S.Ct. 354, 355, 62 L.Ed. 820; The Ansaldo San Giorgio I. v. Rheinstrom Bros. Co., 1935, 294 U.S. 494, 496, 55 S.Ct. 483, 484, 79 L.Ed. 1016. And see cases collected in 9 Am.Jur. 874877.
We have not overlooked the argument that this bill of lading stipulation should be upheld because of this Court's holding and opinion in The Jason, 225 U.S. 32, 32 S.Ct. 560, 56 L.Ed. 969. The Jason case upheld a stipulation that both shipowner and cargo owner should contribute in general average on account of sacrifices and expenses necessarily incurred by the master of the ship in order to preserve the cargo as a whole. Moreover, this general average clause 'was sustained because it admitted the shipowner to share in general average only in circumstances where by the Harter Act he was relieved from responsibility.' Aktieselskabet Cuzco v. The Sucarseco, 294 U.S. 394, 403, 55 S.Ct. 467, 471, 79 L.Ed. 942. Here the shipowner attempted to relieve itself from responsibility for negligence of its employees in connection with damages inflicted on another ship'circumstances where by the Harter Act he was (not) relieved from responsibility.'
Act of Feb 13, 1893, 27 Stat. 445. The Act has now been superseded by the Carriage of Goods by Sea Act of 1936, 49 Stat. 1207, 46 U.S.C. 1300 et seq., 46 U.S.C.A. § 1300 et seq., but any changes are not relevant to the issues here involved.
This proviso was eliminated by the Carriage of Goods by Sea Act of 1936, 49 Stat. 1207, 1210, 46 U.S.C. 1304, 46 U.S.C.A. § 1304.