Opinion ID: 391190
Heading Depth: 1
Heading Rank: 3

Heading: the queeny interests' petitions to limit their liability

Text: 22 Since March 3, 1851, federal legislation, under certain circumstances, has permitted a shipowner to limit his liability to the value of the specific ship involved in an accident. 6 Thus, even where a ship or fleet of ships is owned by a corporation, the privilege of limitation will insulate the remaining corporate assets from claims to which they would otherwise be subject. See G. Gilmore & C. Black, The Law of Admiralty, 818 (2d ed. 1975) (Gilmore & Black). Many assert, as the QUEENY INTERESTS have, that the purpose of the limitation act is to promote competitive United States shipping by reasonably fixing investors' liability to the value of the vessel placed in trade and that the Act was passed to encourage investment at a time when American shipping was struggling to become commercially competitive and that (that) condition is just as valid in the United States today as it was ... when the Act became law. Bankers Trust brief at 12. 7 Others assert that (s)ince approximately 1930 the early enthusiasm, both legislative and judicial, for the limitation principle has cooled. Gilmore & Black at 821. 8 23 Whatever may be the long term trend, in this case, as in most major calamities, high stakes are involved in the granting or rejecting of Keystone's petitions for limitation of liability. Keystone placed a fund of $11,169,501 in the court representing the limitation value of the QUEENY while claims at that time were well above $40 million. 24 In support of its limitation of liability argument, Keystone asserts that the accident was caused solely by the negligent navigation of the QUEENY by Captain Kellog and Pilot Sorenson; that Keystone was without privity or knowledge of these negligent acts; and that, as a consequence, Keystone is entitled to limit its liability to the value of the vessel and freight on the ship at the time of the accident. 25 Villaneuva and BP/Sohio contend that Keystone is not entitled to have its liability limited because the QUEENY was unseaworthy and that its unseaworthy condition was a contributing cause of the collision. They maintain that the astern turbine on board the QUEENY was defective, and that it prevented the QUEENY from obtaining her full rated backing power prior to the accident. They submit that had the astern turbine functioned properly the QUEENY, notwithstanding the negligent acts of the captain and pilot, would have been able to avoid the collision with the CORINTHOS. 26 The district court found that the QUEENY's astern guardian valve and astern turbine were defective on the night of the accident and that these defective conditions were a contributing cause of the tragic collision. It ruled that Keystone should have known of this defective condition and held them in privity. Hence, it denied Keystone's petition for limitation of liability. 27