Opinion ID: 259557
Heading Depth: 1
Heading Rank: 3

Heading: the pennsylvania's claim over against spencer

Text: 12 Irrespective of Wall's employment status, it is clear that Spencer, whose foreman was in charge of the unloading and negligently gave the order that led to the injury, was more to blame than the Pennsylvania. That it should nevertheless succeed in fastening the entire loss upon the Pennsylvania, thereby escaping even the Compensation Act liability it would have borne as Williams' employer in the absence of any fault by either defendant, see 33 U.S.C. 901 et seq., is a result not readily acceptable under 'a legal system that has been so responsive to the practicalities of maritime commerce and so inventive in adapting its jurisdiction to the needs of that commerce'. Swift & Co. v. Compania Columbiana del Caribe, S.A., 339 U.S. 684, 691, 70 S.Ct. 861, 94 L.Ed. 1206 (1950). 13 Any judgment over against Spencer on a theory of contribution seems out of the question. If the only problem were the Supreme Court's refusal, in Halcyon Lines v. Haenn S.C. & R. Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318 (1952), to sanction a departure by the admiralty from the common law rule precluding contribution by joint tortfeasors in other than collision cases, the obstacle might be surmounted here. For the common law rule was subject to an exception when the liability of the two parties arose from tortious conduct of their joint servant, see American Law Institute, Restatement of Restitution, 99; 1 Harper & James, Torts, 10.2, at 716, and cases cited ibid. ns. 8, 11; and, as noted, Wall seems to have been the servant of both the Pennsylvania and Spencer. However, the difficulty is not simply the common law rule but 5 of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. 905, which makes the employer's compensation liability exclusive of any other right to recover damages against him 'on account of' injury to his employee. Before Halcyon, we had held in American Mut. Liab. Ins. Co. v. Matthews, 182 F.2d 322 (2 Cir. 1950), that this was a vaild defense to an asserted right of contribution; although Halcyon did not approve this holding, it likewise did not disapprove it, see also Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 132, n. 6, 76 S.Ct. 232, 100 L.Ed. 133 (1956), and the decision is in line with the weight of authority relating to compensation acts, see 2 Larson, Workmen's Compensation, 76.21 and .22 (1961). Section 5 would also seem an insurmountable obstacle to a judgment over against Spencer on a theory of whtat the judge called 'common law indemnity', see Brown v. American-Hawaiian S.S. Co., 211 F.2d 16, 18 (3 Cir. 1954); cf. Slattery v. Marra Bros., Inc., 186 F.2d 134, 138-139 (2 Cir.), cert. denied, 341 U.S. 915, 71 S.Ct. 736, 95 L.Ed. 1351 (1951), even if we should assume that this doctrine-- of a liability imposed by law on a party guilty of 'active' in favor of one guilty only of 'passive' negligence, see Westchester Lighting Co. v. Westchester County Small Estates Corp., 278 N.Y. 175, 15 N.E.2d 567 (1938); McFall v. Compagnie Maritime Belge, 304 N.Y. 314, 328, 107 N.E.2d 463, 471 (1952); Slattery v. Marra Bros., Inc., supra-- is recognized in maritime law and that there was any reason to disagree with the judge's conclusion that the Pennsylvania was guilty of 'active' negligence. On the other hand, neither the Compensation Act nor the Pennsylvania's 'active' negligence nor the Halcyon decision would bar indemnity from Spencer on the contractual basis of breach of the stevedore's implied warranty to unload the barge in a workmanlike manner. Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 132-135, 76 S.Ct. 232, 100 L.Ed. 133 (1956); Weyerhaeuser S.C. Co. v. Nacirema Operating Co., 355 U.S. 563, 569, 78 S.Ct. 438, 2 L.Ed.2d 491 (1958); Calmar S.S. Corp. v. Nacirema Operating Co., 266 F.2d 79 (4 Cir.), cert. denied, 361 U.S. 816, 80 S.Ct. 56, 361 U.S. 816 (1959); 2 Larson, supra, 76.41. 14 Recovery on this theory is not precluded by the fact that the Pennsylvania was not a party to the stevedoring contract between Spencer and the Lehigh. Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423, 428, 79 S.Ct. 445, 3 L.Ed.2d 413 (1959); Waterman S.S. Corp. v. Dugan & McNamara, Inc., 364 U.S. 421, 81 S.Ct. 200, 5 L.Ed.2d 169 (1960); DeGioia v. United States Lines Co., 304 F.2d 421, 425-426 (2 Cir. 1962); Drago v. A/S Inger,305 F.2d 139, 142 (2 Cir. 1962). But all these decisions extending the stevedore's warranty beyond tow-party contractual relations have done this for the benefit of the owner of the ship being unloaded; we have found no case allowing recovery on the warranty in favor of some other party which, like the Pennsylvania here, stands in a different relationship to the stevedore but has nevertheless been held liable for injuries resulting from the stevedore's breach of warranty. 15 The facts of this case justify taking this further step. See Brown v. American-Hawaiian S.S. Co., supra, 211 F.2d at 18 n. 4. Since the Lehigh Valley owed the Pennsylvania a duty of due care in the use of the hoister to unload the barge, and since Spencer by unloading the barge in compliance with its warranty of workmanlike service would be satisfying that duty of the Lehigh Valley, it seems reasonable to regard the Pennsylvania as a third-party beneficiary of the warranty. See Davis v. Dittmar, 6 F.2d 141 (2 Cir. 1925); American Law Institute, Restatement of Contracts, 133(1)(b); cf. id., 145(b), & Illustration. Indeed, under the inter-railroad agreement the Lehigh Valley went beyond an undertaking to use due care and undertook to hold the Pennsylvania harmless against any claim arising from the unloading of a Lehigh Valley vessel; if the Pennsylvania had seasonably asserted its rights under that agreement 5 it would have been entitled to indemnity from the Lehigh Valley, and the Lehigh Valley could then have recovered from Spencer on the latter's contractual warranty to it, thus achieving in two steps the same result that the Pennsylvania here seeks to achieve in one. Cf. Paragon Oil Co. v. Republic Tankers, S.A., 310 F.2d 169, (2 Cir. 1962). 6 This case is unlike Isbrandtsen Co. v. Local 1291, ILA, 204 F.2d 495 (3 Cir. 1953), where it was held that a charterer of a ship delayed in unloading as a result of an unauthorized work stoppage by longshoremen could not recover damages from the longshoremen's union as third-party beneficiary of the union's collective bargaining contract with a marine trade association of which the stevedoring company retained to unload the ship by a sub-charterer was a member. Judge Goodrich there noted that 'Isbrandtsen is    three steps away from the contracting party' and that 'the labor union was a complete stranger to Isbrandtsen so far as this transaction is concerned,' adding that 'there is no authority known to us which (goes)    to the extent of holding liable a promisor whose contemplation of a third party does not appear from the contract.' 204 F.2d at 496, 497, 498, n. 13. Here, however, Spencer must have known, at the time it contracted to unload heavy cargo for the Lehigh Valley, that cranes would be needed, and it quite obviously expected to meet this need by making use of a hoister belonging to some railroad. 7 That the Pennsylvania, or some other railroad other than the Lehigh Valley, would thus probably be involved in the unloading operation; that this third party would stand to benefit from Spencer's performance of its warranty of workmanlike service, or suffer from its non-performance; and that-- unlike the Isbrandtsen situation-- the third party would be involved in a close working relationship with Spencer essential to Spencer's performance of its basic contractual duty-- all these facts were clearly within Spencer's knowledge at the time of contracting. Cf. Ware v. Cia de Navegacion Andes, S.A., supra, 180 F.Supp. at 945 (ship held third-party beneficiary of implied warranty by pier operator furnishing crane to stevedore). 16 Beyond all this, we have held that a stevedore's warranty of workmanlike performance is not limited to persons who can bring themselves within the rules of third-party beneficiary law. In DeGioia v. United States Lines Co., 304 F.2d 421 (2 Cir. 1962), we rejected a stevedore's claim that it need not indemnify the shipowner because the latter was 'neither a party to nor a third-party beneficiary of the agreement' between the stevedore and the United States Army. 'This claim rests,' we said in an opinion by Judge Clark, 'on a misunderstanding of the nature of the stevedore's obligation.    While the cases speak in the language of contract, it is misleading to cling to the literal implications of that language. The scope of the stevedore's warranty of workmanlike performance is to be measured by the relationship which brings it into being. Since the shipowner here was held liable for injuries the jury found were the foreseeable result of the stevedores' failure to perform in a workmanlike fashion, it may recover indemnification, whether it was strictly a 'third-party beneficiary' or not.' 304 F.2d at 425-426. Accordingly, since the Pennsylvania here was held liable for injuries that were the foreseeable result of the negligence of Spencer's foreman, and since, moreover, the involvement of the Pennsylvania or some other craneowner in the unloading was within Spencer's contemplation at the time the warranty was made, the Pennsylvania was entitled to indemnification 'whether it was strictly a 'third-party beneficiary' or not.' 17 Alternatively, we think the Pennsylvania would be entitled to indemnification on the basis of an independent contract between Spencer and itself. When Spencer's foreman, Alexander, 'hired' Wall to help unload the barge, both were acting within the scope of the authority granted by their respective employers. Despite the informality of the arrangement, see Booth S.S. Co. v. Meier & Oelhaf Co., 262 F.2d 310, 313 (2 Cir. 1958), it amounted to a contract between Spencer and the Pennsylvania-- a contract involving a lease or bailment of the hoister as well as a loan of Wall's services in operating it. We see no reason why this contract should not be deemed to include an implied warranty by Spencer to exercise due care in the use of the hoister, see Baugh v. Rogers, 24 Cal.2d 200, 214, 148 P.2d 633, 641-642, 152 A.L.R. 1043 (1944); cf. Pan-American Petroleum Transp. Co. v. Robins Dry Dock & Repair Co., 281 F. 97, 108 (2 Cir.), cert. denied, 259 U.S. 586, 42 S.Ct. 589, 66 L.Ed. 1076 (1922), or why Alexander's negligent signal would not constitute a breach of this warranty. 18 Having found that the Pennsylvania had a contractual right to indemnity from Spencer, we must next consider whether its own conduct was such as to defeat or limit this right. Recovery by the Pennsylvania on a contract of indemnity is not precluded by the judge's permissible conclusion that Wall's compliance with Alexander's signal constituted 'active negligence', which would bar 'common law indemnity'; Weyerhaeuser S.S. Co. v. Nacirema Operating Co.,355 U.S. 563, 569, 78 S.Ct. 438, 2 L.Ed. 491 (1958), is specific that this is not the test. On the other hand, as the Weyerhaeuser opinion also indicates,355 U.S. at 567, 78 S.Ct. at 440, it would surely be wrong to suppose there can never be circumstances in which the breach of duty by the third-party plaintiff is so great as to preclude it from holding the stevedore on the latter's warranty of workmanlike service. Wherever the line defining such misconduct may lie, see Calmar S.S. Corp. v. Nacirema Operating Co., supra, the Pennsylvania did not cross it here. Spencer's fault was itself the cause of the Pennsylvania's fault, which consisted in Wall's obeying Alexander's imprudent signlal. The case is thus a distinctly stronger one for indemnity than others in which recovery over has been allowed, as when the stevedores 'did no more than bring into play the unseaworthy condition of the vessel', Crumady v. The Joachim Hendrik Fisser, supra, 358 U.S. at 427, 79 S.Ct. at 447, 3 L.Ed.2d 413, or when the ship supplied a defective light which was then negligently handled by the stevedores, Calmar S.S. Corp. v. Nacirema Operating Co., supra. See also Ryan Stevedoring Co. v. Pan-American S.S. Corp., supra,350 U.S. at 134-135, 76 S.Ct. at 237-238; Weyerhaeuser S.S. Co. v. Nacirema Operating Co., supra, 355 U.S. at 568, 78 S.Ct. at 441; Drago v. A/S Inger, supra, 305 F.2d at 142-143. Nor does this case compel us to decide whether fault insufficient to act as a total bar to recovery on the claim over may nevertheless suffice to justify a partial judgment for the stevedore on a counterclaim against the third-party plaintiff. See Pettus v. Grace Line, Inc., 305 F.2d 151, 156 (2 Cir. 1962) (Clark, J., dissenting); 2 Larson, Workmen's Compensation, at 233 (1961). We assume that the direct contract between Spencer and the Pennsylvania should be deemed to include not only an implied warranty be Spencer to exercise due care in its use of the hoister, but a reciprocal implied warranty by the Pennsylvania to supply a sound and adequate piece of equipment, see Mowbray v. Merryweather, (1895) 2 Q.B. 640, 642 (C.A.); American Law Institute, Restatement of Restitution, 93, and a careful operator as well. Ware v. Cia de Navegacion Andes, S.A., supra, 180 F.Supp. at 945. Granting that such a warranty was made by the Pennsylvania, there is no evidence of breach. Nothing suggests that Wall was not a qualified operator; he had been running the hoister for nearly three years before the accident, to the apparent satisfaction not only of the Pennsylvania but of Spencer as well. Negligent vis-a-vis William on this occasion he turned out to be, but it would by wholly unreasonable to suppose that the Pennsylvania warranted an operator who would refuse to execute orders from Spencer entailing risks quite as apparent to Spencer as to him. The Supreme Court has told us that 'Whatever may have been the respective obligations of the stevedoring contractor and of the shipowner to the injured longshoreman   , it is clear that, as between themselves, the contractor, as the warrantor of its own services, cannot use the shipowner's failure to discover and correct the contractor's own breach of warranty as a defense', Ryan Stevedoring Co. v. Pan-American S.S. Corp., supra, 350 U.S. at 134-135, 76 S.Ct. at 237-238; thesame must be true as to the use of such a failure as a counterclaim. 19 Although the Pennsylvania would thus be entitled to indemnity from Spencer on the evidence and the law, there remains a question whether judgment over can be directed on the record as it now stands, in view of the Pennsylvania's reliance at the trial on a theory of recovery differing from the one here found valid. 20 The first count of the third-party complaint was founded on a general stevedoring contract between the Pennsylvania and Spencer, made in 1944, with a clause wherein Spencer agreed to indemnify the Pennsylvania against any claims for personal injuries incident to the stevedoring work and not arising solely from the railroad's negligence. The second count was a general claim that if Williams had suffered injury, this was brought about by his own negligence 'and/or the primary, active, or affirmative negligence' of Spencer, and that 'by reason of the premises' the latter 'is bound to indemnify the Railroad for any sum that the plaintiff may recover against the Railroad.' The first count was included because Williams' complaint had alleged that the barge that was being unloaded was owned by the Pennsylvania. When it appeared at the trial that barge #114 was owned by the Lehigh Valley, counsel for the Pennsylvania conceded that the 1944 contract was irrelevant and afforded no basis for recovery over. Upon the judge's inquiring what the asserted basis was, counsel for the railroad stated at one point that its third-party claim was 'of common law indemnification' and at another that it was based 'on implied or common law indemnification', apparently without perceiving that the two latter concepts were different and might lead to differing results. 21 Although the second count of the third-party complaint threw no light on the specific grounds asserted by the Pennsylvania for recovery over, it was broad enough to include the theories of contractual indemnity we find sustainable as well as the 'common law indemnity' we find not to be. Considering the entire record, we see no basis for concluding that the Pennsylvania abandoned any theory entitling it to indemnity, other than that based on the 1944 contract. But the statements of its counsel were sufficiently ambiguous that Spencer might have been lulled into the belief that the only theory asserted was one of 'common law indemnity,' a view which quite clearly was entertained by the trial judge. While we do not now perceive what defenses Spencer has to the Pennsylvania's claim for indemnity on an implied warranty arising out of the stevedoring contract with the Lehigh Valley-- the text of which, however, is not before us-- or the hiring of the hoister from the Pennsylvania, we would think it improper to foreclose the issue under these circumstances. Accordingly, instead of directing a judgment for the Pennsylvania on the third-party claim, we shall vacate the judgment dismissing the claim and remand the case to the district court with instructions to permit Spencer to present evidence tending to negate liability as an indemnitor under the theories of implied warranty here approved if Spencer be so advised, and if such evidence is not forthcoming within a reasonable time or is not adequate, to enter judgment for the Pennsylvania against Spencer for the amount in which it has been held liable to Williams plus attorneys' fees and disbursements in defending against Williams' claim. See Hormel v. Helvering, 312 U.S. 552, 560, 61 S.Ct. 719, 85 L.Ed. 1037 (1941); Freitag v. The Strand of Atlantic City, 205 F.2d 778, 781-782 (3 Cir. 1953); cf. Massachusetts Bonding & Ins. Co. v. State of New York, 259 F.2d 33, 40 (2 Cir. 1958). 22 The judgment in favor of Williams against the Pennsylvania is affirmed, with costs on appeal; the judgment dismissing the Pennsylvania's claim against Spencer is vacated, with costs, and the case remanded for further proceedings consistent with this opinion.