Earl Warren: Number 297, Dixilyn Drilling Corporation, petitioner versus Crescent Towing and Salvage Company. Mr. Vickery.
E. D. Vickery: Mr. Chief Justice and may it please the Court. We're involved here with a case that deals primarily with the construction of an agreement or a contract between an offshore billing contractor and the towage company or the tug company hired by the drilling contractors to move this rig from Pittsburgh-Mississippi to the Port of New Orleans where additional construction could be completed with respect to it. On the voyage from Pittsburgh to New Orleans, one of the legs of this offshore drilling rig struck the Natchez-Vidalia Bridge crossing the Mississippi River. The trial court found that this collision with the bridge of the -- across the Mississippi River resulted solely and completely from the negligence and the fault of the Crescent Towing and Salvage Company who had supplied the tugs for this towage service. He predicated this finding of sole fault against Crescent primarily on three grounds. First of all, that Crescent had negligently failed to supply sufficient power to control the drilling rig at all times during the movement down the Mississippi River, which I submit to this Court was the very essence of its towing contract, supplying of sufficient power to control this rig at all times. Secondly, the Court imposed liability on Crescent solely in this case because it furnished an unseaworthy tug or an unseaworthy piece of equipment to participate in this activity. And the unseaworthiness of it was demonstrated by the fact that at the crucial moment approximately 100 feet upstream from the bridge that the engine on this particular tug failed and reduce the horsepower that was available to control this rig by approximately 600 horsepower.
Potter Stewart: Is that the same as the second reason one as the same as the first one?
E. D. Vickery: It ties in -- yes, I think it is except that in considering the exculpatory clauses in the contract, Mr. Justice Stewart, Crescent asked you to relieve them not only of their liability for failing to furnish sufficient power but also of their liability for unseaworthiness of their equipment.
Potter Stewart: Was there an explicit finding of unseaworthiness?
E. D. Vickery: The Court found that the engine failed as a matter of law that makes the engine unseaworthy. He did not expressly state in his peti -- in his opinion that it was unseaworthy, but I don't believe anyone would dispute the fact, the mere fact that it failed at the crucial time established the unseaworthiness of the engine on this particular case.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: I don't know of how you can -- unless you have a hole in the hole when the tug sinks, Your Honor then it might be a little bit more unseaworthy. This is no danger to the crew whether if it affects the engine. The third crucial finding of negligence against Crescent was the fact the evidence in the record demonstrated quite clearly that approximately a mile and a half or two miles upstream from this bridge, there was an adequate amount of water in the river where the tugs could have lowered the legs to the desired depth for 55 feet and tested the ability of these tugs to hold and control this rig before they ever attempted to take it down across the rock way immediately above the Mississippi River. These were the three principle findings that were made by the district judge in assessing sole fault against the Crescent Towing and Salvage Company.
Potter Stewart: Mr. Vickery, this case involves the failure to lower these legs and that's the immediate cause of hitting the bridge.
E. D. Vickery: Yes sir.
Potter Stewart: There's a picture of this rig in the opening front page of the -- what are we talking about? Which legs are we going to lower and how?
E. D. Vickery: You lower all three of them, Your Honor. All three would be lowered to a depth of 55 feet in the water. This would be necessary in order to leave only 90 feet of the legs above --
Potter Stewart: Above.
E. D. Vickery: -- the water.
Potter Stewart: An elevation of 90 feet.
E. D. Vickery: Yes sir.
Potter Stewart: 55 feet below the surface.
E. D. Vickery: Yes sir.
Potter Stewart: And is that -- how's that done?
E. D. Vickery: This is done by three motors connected to these three -- two leg -- of these three legs which are constant speed motors that lower the legs at approximately one foot per minute. The plan for navigation under this bridge contemplated the lowering of the legs to 35 feet in the water, well up above the bridge. There is a rock ledge in the river approximately 1500 feet upstream from the bridge which prevented the lowering of the legs until you'd cross that rock ledge below this 35 feet level. The plan was to cross the rock ledge, stop the flotilla until completely.
Potter Stewart: Right.
E. D. Vickery: And then lower the additional 20 feet.
Potter Stewart: And that would have taken about 20 minutes.
E. D. Vickery: Approximately 20 minutes since the legs lower at one foot --
Potter Stewart: Per minute.
E. D. Vickery: -- per minute, yes sir.
Potter Stewart: It would have had to have been stopped there in the water for about 20 minutes.
E. D. Vickery: Yes sir.
Potter Stewart: In order to carry out the plan.
E. D. Vickery: Yes sir. If the Crescent's plan for navigating underneath the bridge, they would have had to hold it steady there in the water for approximately 20 minutes.
Potter Stewart: Is this -- this has been manufactured in Pittsburgh?
E. D. Vickery: Yes sir. (Voice Overlap)
Potter Stewart: -- way down to gulf.
E. D. Vickery: Yes sir. It was on its way down to New Orleans where it would be Crescent and an additional 30 feet would be added to the legs.
Potter Stewart: Where would be what?
E. D. Vickery: Where an additional 30 feet would be added to each of the three legs.
Potter Stewart: You said something else first. Where would this --
E. D. Vickery: =The Crescent -- Crescent Your Honor.
Potter Stewart: Crescent the same thing?
E. D. Vickery: Yes sir. Yes sir, I have -- the decision of this Court, they seem on it Your Honor so I guess it's appropriate that they'd be Crescent.
Potter Stewart: I know, yes.
E. D. Vickery: Yes, it's much like launching a ship. They have the same ceremonies for public relations purposes I assume. The portion of the -- of the drilling rig which actually struck the bridge was the right hand leg in the extreme right hand corner of the picture. Approximately one foot of the upper portion of this leg colliding with the bridge that it is a pretty substantial piece of equipment as indicated by virtue of the fact that the evidence show it picked the bridge up about three feet and set it right back down and there was no damage at all to the rig. The only damage done was to the bridge itself. Now then, the questions presented in this case are primarily two. First of all is an exception to be created to this Court's public policy rule first announced in 1955 in the Bisso and the Winding Gulf cases that holds that a tug company cannot contract a way liability for its own negligence acts. Mr. Justice Black, in writing that decision carefully reviewed all of the previous decisions of this Court and concluded that as a result of judicial history but not only because of judicial history but for cogent reasons in support of the route that contracts in which a tug owner attempted to relieve itself of liability for its own negligence would be struck down as invalid because contrary to public policy.
Hugo L. Black: Has there been any congressional enactment in that subject sense?
E. D. Vickery: Not at all, Your Honor.
Hugo L. Black: There has been in the [Inaudible]
E. D. Vickery: No sir. As far as I know, there has not been any but I would not want the Court to rely on that. It may have been and I might not to be aware of it. As far as I know, there have not been any. The Court stated that there were two rules for announcing this particular rule in validating such contracts because contrary to public policy, the first of which was to discourage negligence by making wrong doers pay damages and the second was to protect those who were in need of goods or services from being overreached by others who had the power to drive hard bargains. And notwithstanding this public policy rule as announced in Bisso and in the Winding Gulf case in 1955, the Court of Appeals below has created an exception to this rule of Bisso in the present case and in so doing relied on the decision in Southwestern Sugar and Molasses Company. That involved a release from negligence clause contained in an Interstate Commerce Commission tariff. In that particular opinion, Mr. Justice Harlan indicated that the Court should not declare invalid a release of liability for negligence where a regulatory scheme had been set up by the Congress without first having the benefit of the Interstate Commerce Commission's views on whether or not this policy of releasing a tour and a tariff from liability for his negligence should be sustained or not. It was an additional language which Mr. Justice Harlan put in that opinion which I considered to be dictum on which the Court of Appeals below has seized in creating the exception to the Bisso rule in a particular case.
Hugo L. Black: Where did the Bisso case come from originally?
E. D. Vickery: It came from New Orleans, Your Honor.
Hugo L. Black: Fifth Circuit.
E. D. Vickery: Yes sir, from the Fifth Circuit.
Hugo L. Black: Where does this case come from?
E. D. Vickery: This case came from the Fifth Circuit, Southwestern Sugar and Molasses came from the Fifth Circuit also, Your Honor. The language in the Southwestern Sugar and Molasses Company case indicated that they're going to send this clause back to the Interstate Commerce Commission for its consideration. But then the Court said if the peculiar hazards involved in towing a barge supplied by the shipper are great and the methods of guarding against those hazards are uncertain, it maybe that in this area, the Court ought to fashion rules to fit particularized circumstances. Now then, as I read this additional language of Mr. Justice Harlan's opinion in the Southwestern Sugar and Molasses Company case, he didn't say that exceptions ought to be, he said, maybe we ought to have exceptions created to the Bisso rule. But he also attached two conditions precedent to any exception to the Bisso rule and these conditions were first of all that the peculiar hazards involved in towing a barge supplied by the shipper had to be great. And secondly, that the methods of guarding against those great and peculiar hazards had to be uncertain. Now, I don't propose to tell this Court that this in the peculiar looking rig, you have the picture there in the respondent's brief and this is probably a trap to -- a picture of which members of this Court have probably had occasion to see before. Certainly, it is an unusual craft, particularly so because of the size of the legs but this, gentlemen, is not any different to my way of thinking as a practical matter in considering a peculiar hazard. I don't think that this drilling barge with these three legs on it poses any greater hazard in navigating down to Mississippi and through these bridges than does a tow consisting of some 30 or 40 separate barges that are latched together then maybe in the control of a single tug. I don't think the hazards here are any greater or any more peculiar. The danger of collision with the supporting spans of a bridge is ever present anytime a tug and barge passes underneath. So I think when it's compared to the other type of traffic that's seen on the Mississippi River that this doesn't particularly represent any unusual hazards that maybe peculiar because this is a peculiarly constructed vessel for the purpose of accomplishing a particular mission.
John M. Harlan II: [Inaudible]
E. D. Vickery: At the time this occurred, Your Honor, there had been two others transported down to Mississippi River also by the Crescent Towing and Salvage Company. I believe that this particular construction, this is known as the internal rig, I believe there are approximately five or six in existence now. I understand there's another one under construction at this time which will be even larger than this one. I would hate to hazard the guess as to how many offshore rigs are in existence that are floatable so they can be moved from one location to another but I suppose 25 or 30 or maybe even more than that.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: Mr. Kohlmeyer I'm sure can answer that question. It's my understanding, however, that the Fifth Circuit had to pass on some other questions on the disposition that they made of the other questions in the case disposed of it and it was not necessary to go to the Interstate Commerce Commission but Mr. Kohlmeyer's firm was in that case and he can give you that information, that's my understanding. But I think the key to whether or not an exception to the Bisso rule should be established in this case, however, from the language of Southwestern Sugar and Molasses is the second condition precedent which Mr. Justice Harlan mentioned. And that is that the methods of guarding against the great and peculiar hazards if we assume that these are great and peculiar hazards, has to be uncertain. I submit to this Court that there's nothing at all uncertain about the method of preventing any damages such as it has occurred in this case. The method of preventing this damage was for Crescent to comply with a very essence of its contract. Supply sufficient seaworthy tugs to control a rig at all times. If they had supplied a sufficient amount of horsepower to this rig, they would have been able to stop it completely in the water as they contemplated but as the District Court found this, they wholly failed to do. They added an additional 25% of horsepower to go through Baton Rouge Bridge further down the river and they experienced no difficulty. They did experience difficulty in approaching the Baton Rouge Bridge, however, until they got the extra horsepower but they didn't try to go through Baton Rouge again until they got sufficient horsepower. And I think that this is a graphic evidence and a graphic illustration of the fact that Crescent had exclusively within its power the absolute way of preventing or guarding against any hazard of this particular rig striking the bridge. So I submit --
Earl Warren: Is there anything in the record to indicate that a mere more horsepower would not have solved this problem?
E. D. Vickery: Mr. Kohlmeyer refers in his brief to the fact that additional horsepower might not have solved this power. I frankly have not reviewed the record on those facts to indicate that, but my recollection of the evidence in the case is that the record will not support that conclusion that sufficient horsepower would in fact have prevented it. In fact, the Captain of the flotilla who the district judge did not believe testified categorically that he held her for the 20 to 25 minutes required to lower the legs. He said that the power that he had was sufficient to control it that he did not need anymore, but the facts of the case demonstrated overwhelmingly to the district judge that in fact the flotilla was under powered. They never --
Earl Warren: Why -- why did he say that it hit the bridge then?
E. D. Vickery: The captain of the flotilla testified that he stopped there for 20 minutes and Dixilyn's duty was to lower the legs at his command. He gave the order that they lowered the legs and that they then told him that all the legs were at the proper height. All of them were 55 feet in the water. So he then started letting the flotilla drift downstream under control of the tugs and then when he was approximately 200 feet upstream from the bridge, he claims that Dixilyn's personnel discovered that they had made a 10-foot error in reading the draft marks on one of the legs and that this could not be discern because of the distances involved and the heights and so forth and that he was not aware of this and that he could not -- being that close to the bridge, he could not again stop the flotilla for the 10 minutes required to prevent it from hitting the bridge. I might say he is the only one, he is the only man in the record who testified to that effect in the evidence from everybody else that he did not stop the tow for any period of 20 or 25 minutes is really uncontested except for the testimony of Captain Bretchel. His version was that an error of Dixilyn had resulted in the legs striking the bridge, but this version of the matter which was Bretchel's all by his self was completely rejected by the District Court. The Court found that there wasn't any error in reading the draft on the legs and the Court found that Dixilyn was not negligent to any extent that they lowered the legs in a proper and a reasonably prudent manner under the circumstances.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: Yes sir. Both of the crafts were fully insured for all the liability because that might result to the bridge in this particular case. Both -- they're normal insurance policies; nobody had to take out any extra insurance. Crescent's own normal insurance policies provided coverage for these damages so it simply boils down to which of the two underwriters pays the damages in this case. It is important, however, Your Honor because these rates are based on experience and so to that extent, it would have some -- it would have some bearing on what the -- on who had to pay the damages, their insurance rates would be affected by it. It's not like an automobile collision everybody in the State of New York pays the same rate. That's not the situation.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: It would have to be figured into his experience, yes sir to either increase or decrease depending on his experience probably over a five-year period, that's the way it's normally computed as the experience of this company over a five-year period of time.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: Yes sir. I think it's very important that we know specifically whether or not Bisso is to remain the law or whether or not an individual particularized circumstances such as Mr. Justice Harlan indicated in Southwestern Sugar, the Court sought to consider the facts and the fashion special rules to make special situations.
Hugo L. Black: Are there different -- different rules for this kind of vessel and others so that they come in a particular category?
E. D. Vickery: The rules are different only because of certain acts of Congress and regulatory --
Hugo L. Black: I mean in reference to rates --
E. D. Vickery: In --
Hugo L. Black: -- insurance rates.
E. D. Vickery: With respect to insurance rates?
Hugo L. Black: Yes. Is this kind of vessel in a different category for insurance rates than the regular vessel?
E. D. Vickery: Yes sir, this offshore drilling rig?
Hugo L. Black: What did you say?
E. D. Vickery: The offshore drilling rig?
Hugo L. Black: Yes.
E. D. Vickery: Yes sir. It's in a different category. They rated -- the offshore drilling rigs are rated separately and apart from tugs and barges.
Hugo L. Black: And what -- with reference to insurance rates, what would be the difference?
E. D. Vickery: I can't tell you. This is something that is a matter of negotiation between an individual assured Your Honor and the insurance carrier that he may select.
Hugo L. Black: But I would assume if the Bisso rule continues to apply, it might make a difference if it were to be overruled.
E. D. Vickery: If this would --
Hugo L. Black: -- difference in rates, would it or not?
E. D. Vickery: Yes sir, I think definitely that it would. It would then pass on, it would increase the insurance rates insofar as offshore rigs --
Hugo L. Black: Prospectively.
E. D. Vickery: Yes sir.
Hugo L. Black: But not retroactively.
E. D. Vickery: Retroactively insofar as any cases that are still pending in the courts below.
Hugo L. Black: Well that would -- they couldn't compensate themselves for the change of the great necess -- necessary change in rates that would be brought about by increasing the liability.
E. D. Vickery: That is correct.
Hugo L. Black: How about decreases?
E. D. Vickery: That's right. They have no way to do it.
Hugo L. Black: What you have here is a question of -- which insurance company would pay. What kind of policy rates will be charged with this particular thing? And it will be materially affected by the way this case is decided.
E. D. Vickery: Yes sir, yes sir.
Hugo L. Black: Remaining probably stationary this though as left as it was but changed if it's overruled?
E. D. Vickery: Yes sir. I think that the tugs rates would then go down and the offshore drilling rig rates would go up because the liability would then be shipped.
Hugo L. Black: That's about the sum total of the controversy.
E. D. Vickery: Well, I suppose that you can -- you can bring it down to that little nutshell, Your Honor, yes.
Hugo L. Black: But that is rather important I assume in their business, isn't it?
E. D. Vickery: Yes sir, it's very important. I don't think that we ought to -- we ought to deceive ourselves into thinking as so many laymen do that simply because a casualty or damages are covered by insurance that the assured is not in fact paying those damages. The insurance companies get their money from various assured. It's sure they spread the risk over a particular industry but when the lost ratio in a given industry goes up either because of increased losses or because in this case say you changed the Bisso rule, the industry has to pay those insurance rates. It's true that they may have some help from other people who are in the industry and the risk is spread over the industry.
Hugo L. Black: So Bisso should be overruled. Your particular insurance company here would be in no way to make up what is lost, wouldn't it?
E. D. Vickery: None at all, none at all.
Hugo L. Black: It wouldn't do any good isn't it? It's only applies prospectively to others.
E. D. Vickery: It's only applied prospectively to others, that's correct.
Byron R. White: What did you say would be the consequence of [Inaudible]
E. D. Vickery: Bisso is overruled. The tug rates would go down because they would then provide in their contracts that they don't have any liability for negligence. It would be shifted to the offshore rigs and the insurance rates on the offshore rigs would go out because everybody has been laboring under the impression that Bisso is the law and that tug companies cannot buy contracts, shift their liabilities from themselves over to the offshore rigs that they're towing.
Byron R. White: [Inaudible]
E. D. Vickery: Well, of course that -- that brings up the question of economic, the economic problems in the case, Mr. Justice White. The owners of these offshore rigs in my experience seldom, if they ever own their own motive power with which to move these rigs. I think that there maybe some but for the most part, they hire tug companies who are skilled and experienced as it was done in this case.
Byron R. White: [Inaudible]
E. D. Vickery: Well, there are a number of tug companies, Your Honor, yes, who do this type of towage. But now if you're talking about competition in the sense that you can go out and a rig can make a contract for a particular type of towage where the tug company will assume liability for its negligence and its unseaworthiness, it's been my experience that almost universally, they try to get exactly what was attempted in this case.
Byron R. White: I think -- you think that the [Inaudible]
E. D. Vickery: I think they did, yes sir.
Byron R. White: [Inaudible]
E. D. Vickery: That's right.
Byron R. White: And [Inaudible]
E. D. Vickery: Yes sir, that's exactly right.
Byron R. White: [Inaudible]
E. D. Vickery: Sir?
Byron R. White: [Inaudible]
E. D. Vickery: Well, the Court may not feel so but if you'll read the evidence, I will state -- you'll see the two barge in the woods that were negotiating for the drilling contract in this particular case while they may not have had us by the throat Mr. Justice White, this is the thing -- the thing I think it's troubling you, it's troubling the -- troubled the Fifth Circuit also and if that's the reason that they reached the result that they reached, your position is why did Dixilyn sign anything? Why didn't Dixilyn back off and say to Crescent --
Byron R. White: What the Court of Appeals did you say that you [Inaudible]
E. D. Vickery: No, I'm sorry. I misunderstood your question, Mr. Justice White. I said I think that it is highly doubtful that we could have found someone who would have done it.
Byron R. White: [Inaudible]
E. D. Vickery: I think that under the previous decisions of the Court of Appeals for the Fifth Circuit and of this Court that we did not. I know that it sounds a little bit unusual under the circumstances and I've always considered this rule that to pass on liability for my negligence to you that I had to spell it out in the plainest of language to be a little bit peculiar. But nevertheless, this liability for negligence and unseaworthiness is an unusual and an extraordinary liability. And if I want to relieve myself of liability for my negligence, what is more sound than to require me to insist and to ensure and to see in the contract without any power of misinterpretation or contradiction that that be spelled out in the plainest of language. That's my position in connection with this case, that the language in this contract is not sufficiently specific. Any other panel I believe of judges in the Fifth Circuit would have reached exactly the opposite result on that point.
Byron R. White: [Inaudible]
E. D. Vickery: It ought to be clear beyond any contradiction, Your Honor, yes sir.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: That's correct.
Arthur J. Goldberg: [Inaudible]
E. D. Vickery: I don't make any apologies for the fact that my client signed this contract on the -- with the thought in mind that this Court in Bisso had said the contract was illegal. I think my client had a right to rely on the Bisso decision in this case. It had a right to rely on the eight previous decisions of the Court of Appeals for the Fifth Circuit that if you didn't put in there specifically the word negligence or its equivalent that you could not pass on these unusual liabilities to the [Inaudible] that was being towed.
Hugo L. Black: Do you think your client had a right to rely on what this Court said in those cases and onto Congress act --
E. D. Vickery: I certainly think so. I don't see why they should be criticized for signing a contract that this Court had said was absolutely illegal. The -- I'd like to save the last few minutes that I have for rebuttal if I may --
Earl Warren: You may.
E. D. Vickery: -- Your Honor if the Court has no other questions.
Earl Warren: Mr. Kohlmeyer.
Charles Kohlmeyer, Jr.: Mr. Chief Justice and may it please the Court. Mr. Vickery has very successfully in his opening put before this Court many of the facts of this case which are not included within this record. The question of whether or not Crescent was negligent, whether or not sufficient horsepower was furnished in this flotilla, whether or not the engine on the tug failed at the critical moment. These questions are not here today. This record has been abbreviated. The case is here on the petition for certiorari addressed to the Fifth Circuit on two issues. The first, the interpretation of the contract and second, assuming that the contract thus purport to shift liability from the tower to the barge whether or not under such circumstances, the barge, rather the contract is valid or invalid under the rule of Bisso. I might say in answer to Mr. Justice Black's question, I think Mr. Justice Harlan has pointed out the inequity of the answer that Mr. Vickery has given in his opinion in Southwestern Sugar where he says it might be hard to say that public policy demands that the tow should at once have the benefit of a rate so computed and be able to repudiate the correlative obligation of procuring its own insurance with the knowledge that the tow boat maybe required to respond in damages for any injury caused by its negligence despite the agreement to the contrary. Now that if the Court please, is what's happened here. These people have gone into a contract knowing the terms of the contract. With those terms before them and here we split off widely from the position of our opponents, with those terms before them, they signed a contract knowing what it says, but relying because there were bears in the woods if you will on the expert advice of their insurance underwriters because as Mr. Justice Stewart suggested this is of course a case where there are two sets of underwriters fighting. Incidentally on the question of underwriters and in an answer to the question about whether Bisso would -- the reverse of Bisso would cause a change in rates, it's been my experience that where there is a subrogation waiver or where there is not a subrogation waiver in a marine policy, there is no distinction whatsoever in the rates. These rates pretty much stay fixed on physical risk and physical risk does not include the area of recovery over against the towing tug or the negligence of the towing tug. This contract, we submit, is a contract which is three-pronged. First, it provided that the tug should have the benefit of the barge's insurance. Second, it provided that in consideration of the performance of this towage at a reduced rate, the barge would not or rather the tug would not be liable to the barge for negligence. And third --
Potter Stewart: Was that -- it's made explicit that a consideration of the towage at a reduced rate?
Charles Kohlmeyer, Jr.: This is disputed if the Court please. It is, however, implicit in the record -- what happened was, these people got together. There was no rate as such given. One of these tugs, only one, was owned by the respondent. It subcontracted the chartering of the other two tugs or the procuring of the other two tugs. Those rates are more or less fixed and there was no question involved in it. These hourly rates and this whole thing run on an hourly basis. It is shown, however, by the record that if there had been a -- an -- a decision on the part of Dixilyn not to accept this release clause of the shifting of liability that Crescent would have procured a trip policy on this rig and thereby would have increase the cost of the towage by approximately 1% of the value of the rig which is $40,000. This rig costs $4 million. 1% on a trip from Pittsburgh to New Orleans would be approximately $40,000. Now --
Tom C. Clark: [Inaudible]
Charles Kohlmeyer, Jr.: Without being an underwriter and not knowing the answer to the question, I would suggest that the answer is negative. I would suggest that these areas that you referred to are not of sufficient moment in building the rate to really make a material difference in the ultimate rate fixed. The basic rate is fixed I think on the construction of this vessel whether it's steel or wood, the type of engines, type of service that it will be used in but I think even Mr. Vickery would agree that these questions of whether you can waive subrogation or waive recovery really form very little in the overall rate making theories of underwriters. This of course is a personal opinion, it's not within the record and I don't know the answer. Now, if the Court please, it is our submission that Bisso did not preclude a shifting of liabilities through the medium of insurance. Bisso purported to say that a straight release of liability where there was a dam barge in tow of a tug could not validly be granted because it tended to cause negligence to become more rife and the second reason was to protect those who needed protection in bargaining from being overreached. Now neither of those particular reasons have any place here before the Court today.
Hugo L. Black: I suppose they do not.
Charles Kohlmeyer, Jr.: The two reasons --
Hugo L. Black: Suppose the reasons that the Court gave in following the rule and considered to be the rule were not adequate reasons, is that any reason why the rules should be ignored?
Charles Kohlmeyer, Jr.: If the Court please; it's our submission that if -- that Your Honors --
Hugo L. Black: Are you asking to overrule --
Charles Kohlmeyer, Jr.: Yes, I think the social one.
Hugo L. Black: That's why I can't understand that.
Charles Kohlmeyer, Jr.: Yes, it's wrong I think.
Hugo L. Black: Yes.
Charles Kohlmeyer, Jr.: And the industry feels that it's wrong.
Hugo L. Black: -- that's what the courts below thought.
Charles Kohlmeyer, Jr.: Yes, I think it does. And it is a fact that despite the existence of the rule would be so, many towers have so-called on a contracts with customers so that knowing that they may not legally contract the way liability and not being able to formulate their insurance programs to cross name each other as assurance, knowing all of that, they still have on the contracts with each other that they won't sue.
Hugo L. Black: How does that affect the rule?
Charles Kohlmeyer, Jr.: It simply shows that the rule is existing to block a legal result that is practically being achieved whether or not legal.
Hugo L. Black: Now have you -- you've produced evidence to show all that.
Charles Kohlmeyer, Jr.: No sir. This is beyond the scope of the record. This is an answer to your question.
Hugo L. Black: Now whatever it is, it is true isn't it that in Bisso and the cases that came down the same day, we held that a contract at that time could not be enforced was invalid.
Charles Kohlmeyer, Jr.: This was a dam barge if the Court please.
Hugo L. Black: Whatever it was (Voice Overlap)
Charles Kohlmeyer, Jr.: Yes, that is correct.
Hugo L. Black: And here, if you win, it has to be held that that rule -- this old rule completely are through a large extent [Inaudible]
Charles Kohlmeyer, Jr.: Not at all sir.
Hugo L. Black: It doesn't.
Charles Kohlmeyer, Jr.: No. We would like to see you overrule Bisso. We would plump for its overruling because we think it's bad law and it's impractical in its result on the inland business. We think that there is no such thing as overreaching a customer. We think that Mr. Justice Douglas' concurring opinion in Bisso showed that he wanted an economic brief. We think we have that basis here in this record before you today to show that there is no economic coercion possible on the part of a tug owner against a barge owner. As Mr. Justice White suggested, they attempt -- any attempt to coerce in this case is clearly shown to have been improper and impossible because they took --
Hugo L. Black: But if we held -- if we held as I thought we did which was the rule which was enforced contract to that kind were invalid, nobody could rely on, how can you get a concurred decision here without overruling the case?
Charles Kohlmeyer, Jr.: If the Court please, this isn't that sort of contract. As I say, I would like to see Bisso overruled.
Hugo L. Black: -- exact exemption of negligence from (Voice Overlap)
Charles Kohlmeyer, Jr.: No, it does not if the Court please. That's one of the main points where we defer.
Hugo L. Black: What is it?
Charles Kohlmeyer, Jr.: This is a contract which has three phases. The first -- this is a letter contract; there's no question about its terms, it's a question about the interpretation of those terms. This tow, says the contract, will be performed by Crescent subject to the towage release clause, a copy of which is attached and it's part of our agreement, it's been mutually understood and agreed that in consideration of including this clause, lower rates will prevail. It is also necessary that we, Crescent, be included in Dixilyn's insurance and we'll appreciate a letter from your underwriters advising us that we have been included. There was -- there was a complete disagreement on that and the towage release clause, next to that letter was declared to be improper. They then wrote another letter with further reference to our undertaking to tow your drawing barge to New Orleans; we confirm that the following additional clause shall be included in the contract. It is particularly understood and agreed that you're authorized to and by this agreement, do release and relieve us from any liability for account of your underwriters and that any damage claims urged by third parties as well as any claim which may be urged by virtue of damage to the drilling rig and the course of the towage shall be for your account and for account of your underwriters.
Hugo L. Black: Why isn't that an exemption from liability?
Charles Kohlmeyer, Jr.: It is if the Court please but is it illegal? Does Your Honor say that Bisso is intended to foreclose the possibility of extending the barges' insurance over to the tug. This wasn't --
Hugo L. Black: What does it do about shifting the liability?
Charles Kohlmeyer, Jr.: As I understand Bisso --
Hugo L. Black: What --
Charles Kohlmeyer, Jr.: -- because of reasons that I consider inadequate --
Hugo L. Black: Maybe I'm wrong but I thought that you would -- I can understand that you're saying Bisso was wrong and ought to be overruled, but I frankly cannot understand, I've looked at the record carefully, I frankly cannot understand how you can say that we would have to overrule it to decide your way?
Charles Kohlmeyer, Jr.: Well, I say please overrule it first (Voice Overlap) but secondarily if the Court the please, I --
Hugo L. Black: Maybe it should be. I'm not saying it shouldn't.
Charles Kohlmeyer, Jr.: I don't see why it is inherent in Bisso that across naming of assureds in an insurance policy is improper. This has nothing to do with Bisso.
Hugo L. Black: But what's the result of it?
Charles Kohlmeyer, Jr.: Well, the result is that the underwriters on the barge pay the loss which is what should happen.
Hugo L. Black: (Voice Overlap) one of them isn't allowed to make the contract, exemption from liability for his own negligence, doesn't it?
Charles Kohlmeyer, Jr.: No, it doesn't do that at all. What it does is it passes liability from one underwriter to another.
Hugo L. Black: That's a different language which was -- what's the effect of it? That lawyer's language as I understand it, but if you get away from --
Charles Kohlmeyer, Jr.: What you have you're saying.
Hugo L. Black: (Voice Overlap) liability, what it does isn't it, honestly and frankly, to let them make a contract which exempt themselves from liability for their own negligence.
Charles Kohlmeyer, Jr.: Yes.
Hugo L. Black: That's right, as I understand it.
Charles Kohlmeyer, Jr.: But in a way that I say is not reprobated by Bisso.
Hugo L. Black: Well, they used different words.
Charles Kohlmeyer, Jr.: No, if the Court please, it is completely different to say to you that you are in -- let's assume you have an automobile that you're riding in or a truck that you're driving and you tell the truck insurance company that you want the truck policy to include all riders as well as the driver of the truck. I don't think this is the same thing at all as saying, I assume your liability to the writers.
Hugo L. Black: So you're saying to get somebody else.
Charles Kohlmeyer, Jr.: No, if the Court please, there is no change in rates for this.
William J. Brennan, Jr.: What if something happens [Inaudible]
Charles Kohlmeyer, Jr.: No sir, our premium is fixed.
William J. Brennan, Jr.: [Inaudible]
Charles Kohlmeyer, Jr.: Oh surely, sure.
William J. Brennan, Jr.: But your negligence [Inaudible]
Charles Kohlmeyer, Jr.: Correct.
William J. Brennan, Jr.: -- insurance is that right?
Charles Kohlmeyer, Jr.: Correct.
William J. Brennan, Jr.: Because you'll pay the premium insurance even though you cross it on barge policy.
Charles Kohlmeyer, Jr.: No, if the Court please, you would eliminate that insurance if you're able to foreclose this.
William J. Brennan, Jr.: (Voice Overlap) insurance?
Charles Kohlmeyer, Jr.: If you're able to foreclose this area of liability.
Byron R. White: [Inaudible]
Charles Kohlmeyer, Jr.: That is correct if the Court please.
Byron R. White: [Inaudible]
Charles Kohlmeyer, Jr.: Correct.
William J. Brennan, Jr.: Well then -- well in fact, that this very case is totally about [Inaudible] your insurance carrier have failed [Inaudible]
Charles Kohlmeyer, Jr.: If there would have been no contract, simply just a towage service, the answer is if we were held to have been responsible for this.
William J. Brennan, Jr.: But you were isn't it?
Charles Kohlmeyer, Jr.: No, the Court didn't reach that point in the Fifth Circuit.
William J. Brennan, Jr.: [Inaudible]
Charles Kohlmeyer, Jr.: Correct, the District Court did, yes sir. We would have paid, that is correct.
Potter Stewart: But in this case, having made this contract, you say the evidence shows that what you -- that you forewent the necessity of getting $40,000 worth of trip insurance.
Charles Kohlmeyer, Jr.: Correct, which we would have gotten at the expense of the barge which would have simply raised the tariff rate.
Potter Stewart: Right.
Charles Kohlmeyer, Jr.: That's one of our arguments that differentiates this from Bisso namely that they have a choice of either taking the contract with the release clause where their insurance would cover us --
Potter Stewart: Or paying $40,000 --
Charles Kohlmeyer, Jr.: They won't let us buy insurance. In the absence of any coercive feature, I know nothing in Bisso that would have anything to say about that particular problem and likewise, despite what Mr. Justice Black says, I can see no basis for Bisso being interpreted as foreclosing the requirement of the insurance cross naming. This isn't the same thing at all as the Bisso case was. Now, finally, there is a grave difference between this case and Bisso in that this case is a -- one which involves the towage of an enormous thing which is just as improper to ask anyone to handle. This is something that is unique in -- probably in the area of Louisiana and New Orleans and it involves such a tremendous amount of values that it's economically unsound to require a shift or rather not to require a shift in liability for those values. That was recently brought out of a shipyard down there. One of these things is worth $8 million. If the tower goes to tow that rig and loses the rig, he can't afford to ever pay the money for it. He'll never make up on his experience. The rig people should do this. The rig people are willing to do it and it's our submission that Your Honor should not say that they cannot do it if they're willing to and there is no coercive power being exercised against them in the economic area to force them to do this. It's a --
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: I see no inhibition against that in the world, no.
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: Although they agreed to give us, to name us in their policy for themselves and their underwriters, they failed to do it and then repudiated that agreement. They kept the good and repudiated the evil in this case. They say we got the cheap rate or in other words, we did not require you to take out special trip insurance on this rig. We took the cheaper of the two rates and now we say we don't owe you because this clause is improper and illegal whereunder we agreed to give you the benefit of our insurance.
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: May I point out if the Court please that moving these rigs is on minute part of the river business and maybe as Mr. Vickery suggest that 50 or a hundred of these things moving once every two months or something like that. This problem is a problem inherent in the movement of a million tons of cargo on the inland waterways that comes everyday all day in hundreds and hundreds of situations daily instead of one or two isolated situations, a week or a month or a year. This is -- this Bisso case is [Inaudible] to the industry and it isn't working out as it was supposed to work out. And it doesn't work out in numerous instances where you have even cross place with one tower having tow -- tug and barge swapping tugs and barges with another company having tugs and barges with mutual releases.
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: That is --
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: If Your Honor -- if I said that, I am completely wrong. There is a particular --
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: There is a particular type of insurance which you use for this type of thing called towers liability which means your responsibility to the thing that you are towing or to a third party if you bring the towed thing into collision with the third party. If there was a release possible, the insurance which already exists on the craft being towed, would pick up that liability and it necessarily follows that if that complete area was stricken from the tugs' liability policy, there would be a decrease in premium of course.
Speaker: [Inaudible]
Charles Kohlmeyer, Jr.: Of course Your Honor it's right.
Speaker: [Inaudible]
Charles Kohlmeyer, Jr.: Of course that's correct.
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: That is correct. And whether or not the public is being required to pay twice for the same thing because your towed craft is carrying collision and P&I Insurance and your towing craft is carrying towers liability. Duplicate --
Arthur J. Goldberg: Yes. [Inaudible] if you have a rule [Inaudible]
Charles Kohlmeyer, Jr.: This is the present --
Arthur J. Goldberg: Is that correct?
Charles Kohlmeyer, Jr.: This is what's happening today and that is correct.
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: That is correct.
Arthur J. Goldberg: [Inaudible]
Charles Kohlmeyer, Jr.: That is correct. Now, if the Court please, the uncertainty in some cases is so much greater than the elusory uncertainty in other cases. Now in this case, there is a question as to whether or not this extra hazardous tow, this extraordinary value where there is these enormous legs have to be sunk beneath the surface and yet can't follow on the bottom of the river whether they'll get down quick enough to clear the river. Whether or not the momentum of this enormous thing coming down could have been stopped no matter how many tugs within reason will put on it. This question show that this particular case is one where an exception, if the Court please, should be made to this question of the broad flat statement that there can be no liability or rather no releases from liability. Because here is the ideal place to apply the rule that Mr. Justice Harlan suggested in Southwestern Sugar that there is extra hazardous towage involved, that there is a reason for a change in the flat statement of the Bisso case. And that here, if nowhere else, there -- a sufficient hazards to justify an exception to that rule. Now, before closing, if the Court please, there are -- there is really one other question inherent in the record and that's the question of the interpretation of the contract. On the assumption that Your Honors were not so much interested in that area because in that area, the Fifth Circuit has held in this case that there is no inconclusive reasoning behind this contract that it's perfectly clear to the Fifth Circuit that the contract can mean only one thing and that the conclusion as Judge Reeves stated is inescapable that Dixilyn when agreed to afford Crescent the benefit of Dixilyn's insurance, it's our submission that under these circumstances since the interpretation of the contract is a question of fact that the factual issue is not to be discussed before the Court and that certiorari here was granted on the sole question of whether or not Bisso was determinative of this particular situation. The briefs have been filed however which cover the position of the interpretation of the contract and although we submit it's quite clear, we think that the real question before Your Honors today is whether this case, assuming you don't want to reverse Bisso although we think it should be reversed and I think the industry feels that it should be reversed at least inside in the inland waterways, the real question is whether or not --
Hugo L. Black: So the industry feels it should be reversed?
Charles Kohlmeyer, Jr.: I think so if the Court please.
Hugo L. Black: Why don't you go to Congress and get it changed if it's all that important?
Charles Kohlmeyer, Jr.: The answer -- the answer to that is I guess that the authority to get a law through Congress' is one of those things that we can never figure how to do. It takes a long and --
Hugo L. Black: Do you think it's easier to get this Court to overrule its decision through this that Congress [Inaudible]
Charles Kohlmeyer, Jr.: Strange as it might say.
Hugo L. Black: They would ask because Congress thinks the law is alright.
Charles Kohlmeyer, Jr.: No, but if the Court please, why should the Court rule as a matter of judge made law that --
Hugo L. Black: Under the Court's rule because the Court has ruled it 40 years before.
Charles Kohlmeyer, Jr.: Well it's the question of interpretation of the circle as I think but assuming that the Court -- obviously, there's no statutory construction involved. It's a court made law that a tug may not get a release from a tow, but why then can a carrier get a release from cargo. You're putting up greater burden on your tower than you're putting on your carrier and certainly, this can't be right, but congressional philosophy, obviously, is the other way around.
Hugo L. Black: Now has any other panel in this Fifth Circuit passed on this question?
Charles Kohlmeyer, Jr.: No sir, not to my knowledge. The Southwestern Sugar case went off when it was on remand on the question of the merits. And the Southwestern Sugars was not involved in that in Label -- the Label case went off on the question of Bisso on the basis and was ruled on -- on Bisso's basis.
Byron R. White: Well, is there a conflict between the Fifth Circuit and some other Circuits on the proper rule construction in this sort of --
Charles Kohlmeyer, Jr.: Oh no, if the Court please. There is only one rule that we know now and that's the rule of Your Honors in Bisso --
Byron R. White: No I mean -- I mean the rule of construction of a contract whether you expressly have to say the magic word negligence.
Charles Kohlmeyer, Jr.: No, no, I think not. In this --
Byron R. White: (Voice Overlap) circuits have held to contrary, haven't they?
Charles Kohlmeyer, Jr.: There are certain areas of holdings where the Court has held that you must use the word negligence -- negligent. And if you don't use it, then you're out.
Byron R. White: This -- the Fifth Circuit -- this simply decline to follow such a rule?
Charles Kohlmeyer, Jr.: Yes, the Fifth Circuit said they would look at the whole contract and they would determine the intent of the parties from the contract and they would not rewrite the contract from -- for the parties but after determining intent, they would hold what the contract said and in this case, they held that it conclusively and inescapably provided for a shifting of liability.
Byron R. White: Well, that could be wrong certainly, but I was rather under the impression that there was an issue in this regard to be resolved here.
Charles Kohlmeyer, Jr.: That is correct if the Court please. There is no question about that but what the --
Byron R. White: But you have suggested awhile ago that the Court wouldn't deal with that issue at all.
Charles Kohlmeyer, Jr.: In Mr. Vickery's petition for certiorari, there were two questions raised. First, the question of the interpretation of the contract and second, the question of the validity of the Bisso rule as applied to this case. That is correct. My statement was that I thought that certiorari was granted on the basis of the Bisso situation rather than on the contracting interpretation.
Byron R. White: Well you do agree then that the Court does have to rule --
Charles Kohlmeyer, Jr.: Oh yes.
Byron R. White: -- or should rule on this interpret -- on this rule construction.
Charles Kohlmeyer, Jr.: I think that the Court -- I admit it's before the Court, yes, whether or not the Court wishes to rule on it of course it's up to the Court. But --
Byron R. White: But you deny there is a conflict?
Charles Kohlmeyer, Jr.: Oh, I don't think there's any conflict in the circuits. I don't see how it could be because it's a factual conflict of the interpretation of the contract obviously is factual and I think that no matter what you say about your Fifth Circuit using the word negligence as a so-called talismanic word or the Sixth Circuit not doing it, that doesn't create a conflict in the two circuits in the sense that Your Honor refers to. This is simply --
Hugo L. Black: As a matter of fact, this particular way of getting around Bisso was the creation of the Fifth Circuit, isn't it, no other one has even suggested.
Charles Kohlmeyer, Jr.: That you're in my circuit, the Court please.
Hugo L. Black: Is that a fact?
Charles Kohlmeyer, Jr.: No.
Hugo L. Black: Maybe you have searched about this. It's you.
Charles Kohlmeyer, Jr.: I can't agree to that one --
Hugo L. Black: Is -- has any other Circuit held it?
Charles Kohlmeyer, Jr.: I don't think it's been presented if the Court please in any other Circuit.
Hugo L. Black: That's right.
Charles Kohlmeyer, Jr.: But this is a first case up that I know of in this area. Your Honors refused certiorari in Label, but that could have been --
Hugo L. Black: What does Label hold?
Charles Kohlmeyer, Jr.: Label was another situation involving Southwestern Sugars, it was the same thing and for all practical purposes Southwestern Sugars could have been decided in the Label case. Both of those involved regulated carriers, an ICC regulation.
John M. Harlan II: [Inaudible] never got back in the ICC.
Charles Kohlmeyer, Jr.: No sir, if the Court please. The case was -- went back to the Fifth Circuit on your remand and there went off on the factual issue of whether or not there was negligence held none. I see my time is up. Thank you very much.
Earl Warren: Mr. Vickery.
E. D. Vickery: May I suppose on the Court for just a minute or two possibly a few comments that I might make with respect to this, with respect to Mr. Justice White's question as to whether or not any of the other circuits had considered the definiteness of the First Circuit, the Second Circuit, the Seventh and Eighth and the Ninth Circuits have all followed the rule that it has to be stated in the -- inexplicable language in the contract itself not from parole evidence that you may get from the parties.
Byron R. White: [Inaudible]
E. D. Vickery: The fact that I am passing my negligence on to you after this.
Byron R. White: [Inaudible]
E. D. Vickery: That's fatal, yes sir. And to show you how far the Fifth Circuit has gone in two of these cases which it refused to follow where the language of negligence was used. The Court says, that means simple negligence only and we will not interpret it to mean willful or wanton negligence. They were trying to stick the railroad with willful and wanton negligence and they said you put negligence in there that just means simple negligence. Now, that's how strict the Fifth Circuit had been with respect to the interpretation of contracts.
Potter Stewart: It used to be until this case.
E. D. Vickery: Until this case. This is a new rule in the Fifth Circuit. There's no question about that.
Byron R. White: [Inaudible]
E. D. Vickery: Yes sir.
Byron R. White: And not just to the [Inaudible]
E. D. Vickery: That's right.
Byron R. White: You don't have [Inaudible]
E. D. Vickery: I don't think you have to foresee the particular accident but I think the least that a party in my -- in the position of a drilling barge is entitled to as they have this spelled out in the plainest of language in the contract. And heretofore, the courts have required the party seeking the exemption to have that spelled out in the contract. The Fifth Circuit now puts that on the party who is assuming a liability which I think it's getting it in the wrong place. Now just one other comment if I may and that's with Mr. Kohlmeyer may have left the impression with the Court that it had been known that Cres -- that Dixilyn was going to take its present position that they will spend $40,000 to buy a special trip insurance policy for this particular towage. I think that I have answered this specifically in my reply when they first solicited this business from Dixilyn. They told us they had all the hall and P&I Insurance they needed. And if this would guarantee full and maximum efficiency in the towage and he has also implied or possibly has created the impression with the Court that under these circumstances they would have gotten this special policy and they gave Dixilyn a choice of rates. This is absolutely incorrect Your Honor. There is nothing in the record that will support this. And let me just read one question and one answer from Crescent's Vice President Smith. Mr. Kohlmeyer would lead you to believe that they gave Crescent -- Dixilyn a choice of rates and said that if you bear the insurance, it will cost you so much. If Crescent bares the insurance, it will cost you so much. This is a question that was asked to Vice President Smith of Crescent. There was never any quotation or any indication given to Dixilyn of any kind that it would cost them so much to move this rig if they board the [Inaudible] from the insurance and it would cost them so much more if you bore it. Answer, that question never arose. I submit to the Court that the decision of the Fifth Circuit which creates an exception to Bisso is clearly wrong as it's the refusal of that Court to follow the decisions of five other circuits of this Court and of eight previous decisions of that court interpreting this contract and I submit the case should be reversed to the Fifth Circuit for further consideration of the fact findings. Thank you Your Honors.