Petition for Writ of Certiorari — Chinese Maritime Trust, Ltd. v. Panama Canal Co.

Supreme Court brief1974

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Text

DUE Coen ens

FILED

SEP 27 1973

LIBRARY

@UPRE WE COURT, U

MICHAEL RODAK, JR.,CLERK

IN THE

Supreme Court of the United States

October Term, 1973

No. | ¢3 26 0

CHINESE MARITIME TRUST, LTD., etc.

Petitioner,

PANAMA CANAL COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Davip C. Woop

BENJAMIN E. HALLER

DANIEL K. READ

Counsel for Petitioner

One World Trade Center

Suite 5215

New York, N. Y. 10048

PAGE

Opinions below .........seeeeeereeeeeeeereeeeees 1

Jurisdiction .........cccccceeeeesecvvceerseeeees 1

Questions presented ..........0seeeeeeeee eee eeees 2

Statutes involved ...........ce cere crete eeee eens 3

Statement of the case ........eeeeee eee eeee renee 5

Reasons for granting the writ ........-.++eeee sere )

1. The decision below, implying that an inno-

cent vessel owner may not abandon a sunken

vessel and thereby avoid further personal

liability, is in conflict with the prior case law

on an important question not previously de-

cided by this Court ..........+e-eeeeeeeee 9

2. The decision below sanctions a departure

from the accepted and usual course of judi-

cial proceedings in denying the concursus of

a limitation proceeding, before trial of the

merits, although there are multiple potential

in rem claims greatly exceeding the limita-

RE nce Guesiess eters begussseens 13

CN ss casencebeese eben enceveneeeees 14

APPENDIX:

Opinion of the District Court .........+.++++: la

Order of the District Court ........ 6.6500 e ees 8a

Opinion of the Court of Appeals .........++5- 10a

TABLE OF CASES

PAGE

Highland Navigation Corp., In re, 24 F.2d 582 .... 12

Just v. Chambers, 312 U.S. BBB ....... ccc ccc eees 14

Lake Tankers Corp. v. Henn, 354 U.S. 147 ........ 14

SE Wi Wes UE a OE hoc exedacasenevenseseocecs 12

Marine Leasing Servies, Inc., In re, 328 F.S. 589,

“. & by & errr rer Try 12

Midland Enterprises, Ine., In re, 296 B.S. 1856 .... 13

Orrell v. Wilmington Iron Works Inc., 89 F.S, 418 12

Pacific Far East Line, Inc., In re, 314 F.S. 1339 .. 6,13

U.S. v. Bethlehem Steel Corporation, 319 F.2d 512 11

U.S. v. Cargill, Inc., 367 F.2d 971 .........eeee 11,12

U.S. v. Moran Towing & Transportation Co., ‘374

CE LaGeae uaa Gee cee etEeuens an 11

Wyandotte v. U.S, 389 U.S. 19] 2... cee eee ee 7, 8, 11,12

iii

PAGE

Statutes and Rules

B UGC. $GOL .cccccccvccccccccccesesceccsoeess 10

26 U.S.C. §$1254(1) .... cc eee cc cere recerecceeens 2

BB ULS.C. § 401, et Sq. 66. cece cere eee eee e ere enes 6, 10

BO UBC, $ GOB cccicccccvcccesvessesccsestaceess 9, 10

BB U.S.C. $400 ....ccccecccccsccccerecccenes 3, 10, 11, 12

TE UBL. GEIS .cccccrcrvecsccsesccscciscvevctas 10, 14

46 U.S.C. § 183 0... cccccceccccrcccccceessecess 3

B56 CPR. CRBS occccccccccccccscceqaveseesees 6, 10, 11

Supplemental Rules for Certain Admiralty and

Maritime Claims, Rule F ...........6. 0 eee eee 8

‘

IN THE

Supreme Court of the United States

October Term, 1973

No.

| Cuinese Maritime Trust, Lv., ete.

Petitioner,

Vv.

| PanaMa CanaL Company,

Respondent,

ray

’

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

The petitioner, Chinese Maritime Trust, Ltd., respect-

fully prays that a writ of certiorari issue to review the

judgment and opinion of the United States Court of Ap-

peals for the Second Circuit entered in this proceeding on

April 30, 1973.

Opinions Below

The opinion of the United States Court of Appeals for

the Second Cireuit, reported at 478 F.2d 1357, is printed

in the Appendix hereto (pp. 10a-18a). The opinion of the

United States District Court for the Southern District of

New York, not yet officially reported but published at 1972

A.M.C. 1478, is also printed in the Appendix (pp. la-7a).

Jurisdiction

The judgment of the United States Court of Appeals for

the Second Cireuit was entered on April 30, 1973. An exten-

SMILE -mevemmnm asa ane RE AIO HR REECE FTAA PREPS PR OP EOP

sion of time to file this petition until September 27, 1973,

was given by Justice Lewis F. Powell, Jr. because of the

extended illness of counsel for petitioner. The jurisdiction

of this Court is invoked under 28 U.S.C. Section 1254(1).

Questions Presented

1. Is the Panama Canal Company’s claim for the ex-

penses of removing a wreck from the Panama Canal subject

to an injunction issued in the vessel owner’s proceeding

brought to limit its liability restricting the prosecution of

all claims arising out of the sinking to that proceeding?

2. Can the issue of limitability of a claim for wreck

removal properly be decided on motion before a trial on the

merits to determine whether the sinking was negligent and

whether the vessel owner was privy to or knew of that

negligence?

3. Where multiple claims far exceed the limitation fund,

may the Panama Canal Company’s claim for wreck removal

expenses properly be asserted in a separate action?

4. May the Court of Appeals properly condition its

affirmance of the District Court’s opinion, which held with-

out qualification that the Panama Canal Company’s claim

for wreck removal expenses need not be filed in petitioner’s

limitation proceeding, on the Panama Canal Company’s

agreement to bring its action in the Southern District of

New York so that all claims arising out of the SIAN

YUNG’s sinking may be tried together?

5. May the District Court and the Court of Appeals

properly ignore this Court’s admonition to favor the redue-

tion of litigation where possible by avoiding multijurisdic-

tional litigation, particularly where, as here, the concursus

brought about by petitioner’s limitation proceeding would

accomplish that end?

oa Say

——

CV Ron LT AMD

Statutes and Regulations Involved

United States Code, Title 46, Section 183:

‘*(a) The liability of the owner of any vessel,

whether American or foreign, for any embezzlemeut,

loss, or destruction by any person of any property,

goods, or merchandise ship or put on board of

such vessel, or for any loss, damage, or injury by col-

lision, or for any act, matter, or thing, loss, damage,

or forfeiture, done, occasioned, or incurred, without

the privity or knowledge of such owner or owners,

shall not, except in the cases provided for in subsec.

tion (b) of this section, exceed the amount or value of

the interest of such owner in such vessel, and her

freight then pending.’’

Supplemental Rules for Certain Admiralty and Mari-

time Claims, Rule F. Limitation of Liability:

‘*(3) Claims Against Owner; Injunction. Upon

compliance by the owner with the requirements of

subdivision (1) of this rule all claims and proceed-

ings against the owner or his property with respect

to the matter in question shall cease, On application

of the plaintiff the court shall enjoin the further

prosecution of any action or proceeding against the

plaintiff or his property with respect to any claim

subject to limitation in the action.’’

United States Code, Title 33, Section 409:

‘*It shall not be lawful to tie up or anchor vessels

or other craft in navigable channels in such a man-

ner as to prevent or obstruct the passage of other

vessels or craft; or to voluntarily or carelessly sink,

or permit or cause to be sunk, vessels or other craft

in navigable channels; or to float loose timber and

lows, or to float what is known as ‘sack rafts of tim-

ber and logs’ in streams or channels actually navi-

ated by steamboats in such manner as to obstruct,

impede, or endanger navigation, And whenever a

vessel, raft, or other craft is wrecked and sunk in a

navigable channel, accidentally or otherwise, it shall ;

be the duty of the owner of such sunken eraft to im-

mediately mark it with a buoy or beacon during the

ENN EE LY Oe

seemed

RL TS BELLI. BIDE

day and a lighted lantern at night, and to maintain

such marks until the sunken craft is removed or

abandoned, and the neglect or failure of the said

owner so to do shall be unlawful; and it shall be the

duty of the owner of such sunken craft to commence

the immediate removal of the same, and prosecute

such removal diligently, and failure to do so shall be

considered as an abandonment of such craft, and

subject the same to removal by the United States as

provided for in sections 411 to 416, 418, and 502 of

this title.’’

‘

b |

United States Code, Title 33, Section 412:

‘*Any and every master, pilot, and engineer, or

person or persons acting in such capacity, respec-

tively, on board of any boat or vessel who shall

knowingly engage in towing any scow, boat, or vessel

loaded with any material specified in section 407 of

this title to any point or place of deposit or dis-

charge in any harbor or navigable water, elsewhere

than within the limits defined and permitted by the

Secretary of the Army, or who shall willfully injure

: or destroy any work of the United States contem-

‘ plated in section 408 of this title, or who shall will-

fully obstruct the channel of any waterway in the

manner contemplated in section 409 of this title, shall

be deemed guilty of a violation of sections 401, 405,

404, 406, 407, 408, 409, 411 to 416, 418, 502, 549, 686,

and 687 of this title, and shall upon conviction be

punished as provided in section 411 of this title, and

shall also have his license revoked or suspended for

a term to be fixed by the judge before whom tried

and convicted. And any boat, vessel, scow, raft, or

other craft used or employed in violating any of the

provisions of sections 407, 408, and 409 of this title

shall be liable for the pecuniary penalties specified

in section 411 of this title, and in addition thereto for

the amount of the damages done by said boat, vessel,

scow, raft, or other craft, which latter sum shall be

placed to the credit of the appropriation for the im-

provement of the harbor or waterway in which the

damage oceurred, and said boat, vessel, scow, raft,

or other craft may be proceeded against summarily

by way of libel in any district court of the United

States having jurisdiction thereof,’’

Reid: Paeaae

Genesee ryan WAST RI ESTES SERRA Dy ORG II IEF NGL NN FEIN ES ELE I £1

Code of Federal Regulations, Title 35-Panama Canal:

‘©§ 117.5 Control of wrecked, injured, or burning

vessels.

‘‘When a vessel in Canal Zone waters goes

aground, or is wrecked, or is so injured that it is

liable to become an obstruction in such waters, or

is on fire, the Canal authorities shall have the right

to supervise and direct, or to take complete charge

of and conduct, all operations which may be neces-

sary to float the vessel, to clear the wreckage, to

remove the injured vessel to a safe location, or to

extinguish the fire, as the case may be. The Canal

authorities may, when necessary, take such action

without awaiting the permission of the owner or

agent of the vessel, and may require the master of

the vessel and all persons under his supervision and

control to place the vessel, and all equipment on

board, at the disposal of the Canal authorities with-

out cost to the Canal. Unless the Panama Canal

Company is subsequently found and determined to

be responsible for the accident or the condition neces-

sitating action by the Canal authorities, the neces-

sary expenses incurred by the Canal in carrying out

the provisions of this section shall he a proper

charge against such vessel, her owners and/or her

operators.”’

Statement of the Case

The SIAN YUNG struck the bank and sank on Decem-

ber 6, 1970, while transiting the Panama Canal under the

compulsory control of a Panama Canal Company pilot.

The Republic of Vietnam sued the shipowner (petitioner)

in the United States District Court for the Southern Dis-

trict of New York, alleging damages of $1,600,000. Peti-

tioner then filed the complaint herein seeking exoneration

from or limitation of liabiilty, tendering a stipulation for

the value of its interest in the vessel and pending freight,

and seeking restraint of the prosecution of claims against

it otherwise than in this proceeding, all pursuant to Rule F

| Se te SMES RRS OR ARAN PRN TORRE RNSY

PLE LT EVID

oo}

aa |

Pe ee, Ee ee

of the Supplemental Rules for Certain Admiralty and Mari-

time Claims.

On January 18, 1971, the District Court (Cannella, D.J.)

by order approved petitioner’s ad interim stipulation for

value, directed notice to all claimants to file claims herein

by March 2, 1971 or be defaulted, and restrained other pro-

ceedings. Claims in amounts greatly exceeding the amount

of the limitation fund were filed by the Republic of Vietnam

and other cargo claimants.

Respondent, Panama Canal Company, filed no claim but,

within the tinie fixed for filing claims, moved for a unique

order declaring that an action by it for wreck removal costs

would not be subject to the injunction contained in the

restraining order, or alternatively that its time within

which to file a claim be extended. The affidavit of Philip A.

Berns, of the New York office of the Admiralty and Ship-

ping Section of the Department of Justice, in support of

the motion contended that under applicable Canal Zone

regulations (35 C.F.R. § 117.5) and ‘‘the analogous Wreck

Act’’ (33 U.S.C. § 401, et. seq.), wreck removal expenses

incurred by respondent were recoverable from “the vessel,

her owners and/or operators.’ It alleged, citing In Re

Pacific Far East Line, Inc. (Guam Bear), 314 F. Supp. 1339,

1349-1350 (N.D. Cal. 1970), that failure to remove “a

negligently created obstruction”? is clearly within the priv-

ity and knowledge of the owner, precluding ‘‘any limitation

or exoneration as to that claim.’’ Supposedly, ‘‘informa-

tion has indicated’’ negligence on the part of the shipowner

and crew but the source or substance of such information

was not given and no claim of personal knowledge on the

part of the affiant was made.

The District Court was informed by affidavits that the

Board of Local Inspectors of the Canal Zone had found

respondent’s pilot at fault for mancuvering at excessive

speed and that petitioner's crew contended this was the

sole cause of the sinking.

Nevertheless, the District Court, (Motley, D.J.), noting

that whether removal costs were subject to limitation was 4

expressly reserved by this Court in Wyandotte Transpor- ‘

tation Co. v. United States, 389 U.S. 191, 205 n. 17 (1967),

decided as ‘‘a question of first impression in this Cireuit’’

(2a) that such costs were ‘‘not subject to limitation, as a

matter of law.’’ Privity and knowledge was found merely

because the wreck was there and did not require a factual

determination in the limitation proceeding. (3a) Since the

claim was not limitable, an ‘‘action for the costs of removal

of the s.s. Sian Yung from the Panama Canal should not be

subject to the injunction in the restraining order in this

action.’’ (7a)

The District Court stated:

SSE ARN

‘‘We are not granting judgment for the Canal

Company on its claim; we merely hold that if they do

recover, that recovery is not limitable. If negligence

is in fact an element of the Canal Company’s case

and is not proved, the owners are free to defend and

prevail on that ground.’’ (5a)

The District Court thus necessarily implied that an

innocent vessel owner may no longer abandon a sunken

vessel and thereby avoid in personam liability.

Neither respondent’s motion nor the order granting it

specified whether the proposed claim for removal expenses

was to be asserted against the owner in personam, against

the vessel in rem, or both. The order’s unqualified refer-

ence to ‘‘an action for the costs of removal’’ (9a) would

therefore permit the separate prosecution of such a claim

both in personam and in rem.

The Court of Appeals for the Second Cireuit affirmed

‘*substantially for the reasons stated in Judge Motley’s

opinion’’ (12a), subject to a condition discussed below. It

relied heavily on Wyandotte Transportation Co. v. United

States, 389 U.S. 191 (1967), saying:

‘‘In Wyandotte * * *, the Supreme Court, hold-

ing that where a ship was negligently sunk in

ELE ESS OE TENT TRE A TEI PE STENT TNT SMES SPO SEA EMER EU AE ARO

navigable waters and thereafter abandoned, the

Government could recover wreck removal costs from

the shipowner, indicated that the recovery would not

be subject to limitation under the Limitation Act,

since the owner would have had ‘privity or knowl-

edge’ within 46 U.S.C. § 183(a). * * *.’? (18a)

The Court of Appeals did not consider the fact that the

premise of the Wyandotte decision was not merely that the

ship ‘‘was negligently sunk’’ but that it was sunk through

the personal negligence of the owner. The issue in Wyan-

dotte was the legal sufficiency of the government’s com-

plaints which alleged negligence on the part of the owners

in equipping and manning the vessels (38 U.S. 194-6).

Wyandotte, therefore, did not reach the question of the

in personam liability of a non-negligent owner whose vessel

has been sunk by the negligence of others.

The Court of Appeals, although affirming that re-

spondent’s claim was not subject to the limitation injunc-

tion, conditioned its affirmance on a singular requirement

‘*that all parties consent to litigation in the United States

District Court for the Southern District of New York of all

claims arising out of the sinking of the ss Sian Yung.’’

(1la, 18a) The condition was imposed in recognition of the

fact that ‘‘if the Canal Co. pursued its claim for expenses

of wreckage removal in a separate action in the Canal Zone,

as it originally intended, the owner and perhaps some of the

cargo claimants would be forced to engage in duplicative

litigation of identical issues in these two widely separated

districts.’’ (17a) By imposing this condition, the Court

sought to ‘‘permit litigation of all claims before one judge

under that district‘s individual calendar system, thus mini-

mizing expense and delay.’’ (18a) All of which amounted

to denying the application of the ‘‘concursus’’ theory in

law, but requiring it in fact, a confusing and dangerous

precedent.

Reasons For Granting The Writ

The case presents important substantive and procedural

questions of the interpretation and application of United

States statutes and regulations pertaining to shipping not

previously ruled upon by this Court.

1. The decision below, implying that an innocent vessel

owner may not abandon a sunken vessel and thereby

avoid further personal liability, is in conflict with the

prior case law on an important question not previ-

ously decided by this Court.

The argument upon which the decisions below are based

is that once the owner knows that the vessel has been sunk,

its failure to remove it is necessarily within its privity and

knowledge and liability for the costs of removal, therefore,

cannot be limited.

The effect of privity and knowledge, however, is not to

create liability in the absence of any breach of duty but

merely to forfeit the right to limit with respect to an other-

wise existing liability. If an innocent owner may properly

abandon its vessel and thereby avoid in personam liability,

its privity and knowledge with respect to the decision to

abandon and not remove the wreck is academic. It is there-

fore necessary to examine the relevant statutes, rules and

regulations to determine whether they bar an innocent

owner from abandoning the wreck and impose upon him the

unavoidable duty of removing it. For the purpose of this

analysis that state of facts most favorable to the petitioner

must be assumed since the adverse ruling below was made

as a pure question of law without resolving any contro-

verted factual issues. Petitioner’s allegations that the sink-

ing and all resulting losses were not caused by its fault or

that of any persons for whom it is responsible (complaint

para. Seventh) must be accepted as the controlling factual

hypothesis. The relevant sections of the act of March 3,

1899, 30 Stat. 1151, ef seg. (88 U.S.C. § 403, ef seg.) must

therefore be analyzed in the light of this premise.

ee 2

The first sentence of section 409 declares it unlawful ‘‘to

voluntarily or carelessly sink, or permit or cause to be sunk,

vessels or other craft in navigable channels.’’ This cannot

apply to an owner who, by hypothesis, neither voluntarily

nor carelessly caused the sinking.

Section 409 imposes on the owner of a sunken craft the

duty to mark it and declares failure to do so unlawful. It

then goes on to state ‘‘it shall be the duty of the owner of

such sunken craft to commence the immediate removal of

the same, and prosecute such removal diligently, and

failure to do so shall be considered as an abandonment

of such craft, and subject the same to removal by the

United States as provided for in sections 411 to 416, 418 and

502 of this title.’’ Thus the failure to remove, as opposed

to the failure mark, is not specifically declared unlawful but

is defined as the equivalent of an abandonment.

Section 412 specifically imposes in rem liability on any

vessel ‘‘used or employed in violating’’ section 409, i.e., any

vessel ‘‘voluntarily or carelessly’’ permitted to be sunk in

navigable channels, for any resulting damage.

With respect to vessels sunk in the Panama Canal, the

provisions of 33 U.S.C. §§ 403, et seg. are supplemented by

35 C.F.R. § 117.5 issued by the Secretary of the Army pur-

suant to powers delegated by the President under the

authority of the Canal Zone Co., 76 A Stat. 1331, 3 U.S.C.

§ 301. This regulation was described by counsel for respon-

dent as ‘‘consistent with the Rivers and Harbors Act, 33

U.S.C. § 401, et seq.’’ (Berns Affidavit, p. 3)

Referring to this regulation, the District Court said:

‘‘Liability for removal costs under § 117.5 arises

from the obligation imposed by the regulation itself

upon the shipowner to remove the wreck or pay for

its removal by the Canal Company.’’ (3a)

The language of the last sentence of the regulation does

not support this unqualified statement. It states that the

Canal Company’s expenses ‘‘shall be a proper charge

against such vessel, her owners and/or her operators’’.

The use of the disjunctive ‘‘and/or’’ plainly implies that

the owners’ or operators’ obligation to reimburse the Canal

Company does not necessarily exist in every case. If the

regulation is to be read in a manner consistent with the

Wreck Act, the provisions of 33 U.S.C. § 409 recognizing

the possibility of abandonment must be taken into account.

7 If, therefore, an innocent owner has the right to abandon

the vessel and thereby free himself of personal liability,

nothing contained in 35 C.F.R. § 117.5 can properly be held

to abrogate that right.

Before this Court’s decision in Wyandotte v. U.S., 389

U. S. 191 (1967), there was a division of authority as to

whether a negligent owner might avoid personal liability

by abandoning a sunken vessel. U.S. v. Bethlehem Steel

Corporation, 319 F.2d 512 (9 C.A. 1963); U.S. v. Moran

Towing & Transportation Co., 374 F.2d 656 (4 C.A. 1967) ;

contra: U.S. v. Cargill Inc., 367 F.2d 971 (5 C.A. 1966). The

question was resolved by this Court in Wyandotte holding

that at least where personal negligence of the owner is

alleged, a complaint to recover wreck removal expenses in

personam is not legally insufficient. The court emphasized

in a footnote, 389 U.S. at page 197, that ‘‘questions involv-

ing a non-negligent sinking, which is not forbidden by § 15,

[33 U.S.C. § 409], are not now before us * * * ’’.

On the Wyandotte record it is also clear that the court

did not face the question of a sinking resulting from the

negligence, not of the owner, but of some other party.

The Wyandotte opinion repeatedly stresses the fact that

what was involved was the government’s remedy against a

negligent party :

‘“‘The government may, in our view, seek an order

that a negligent party is responsible for rectifying

the wrong done to maritime commerce by a $15

violation,’’ (204)

Hera ESR MONEE RENNIN REINER LESBO PRT MERD OEREN SY VOTE ER LE COO

‘*Indeed, in any case in which the Act provides a

right of removal in the United States, the exercise

of that right should not relieve negligent parties of

the responsibility of removal.’’ (205)

In accordance with this reasoning the Court rejected as

‘‘illusory non-statutory law’’ the argument that a negligent

owner might abandon a vessel and thereby avoid all but

im rem liability. (209)

Thus nothing in Wyandotte forecloses the right of an

innocent owner to abandon a wrecked vessel and thereby

avoid in personam liability. Such a right has been recog-

nized repeatedly both before and after Wyandotte. In re

Highland Nav Corp., 24 F.2d 582 (S.D.N.Y. 1927) ; Orrell v.

Willmington Iron Works Inc., 89 F.S.. 418 (E.D. N.C. 1950) ;

Loud v. U.S., 286 F. 56 (6 C.A. 1923) ; In re Marine Leasing

Services, Inc, 328 FS. 589 aff’d 471 F.2d 255 (5 C.A. 1973).

The Court of Appeals for the Fifth Cireuit in United

States v. Cargill Inc., 367 F.2d 971 (1966), the decision

affirmed by this Court in Wyandotte, said:

‘Therefore, we believe the correct reading of the

statute allows only an innocent owner to abandon his

ship and that a negligent party must raise the vessel

or pay for its removal.’’ (978)

In the same decision the court recognized the distinction,

ignored by the courts below in the present case, between

in rem and in personam liability for wreck removal costs:

‘*The right to recover in rem from the vessel so

removed flows from ownership of the vessel and does

not preclude recovery of reasonable removal costs

from a tortfeasor.’’ (367 I'.2d at 976)

The reference in 33 U.S.C. § 409 to abandonment as the

implied consequence of an owner’s failure to remove would

have been meaningless if in no circumstances an owner

could thereby avoid personal liability. To give the Act

meaning it must be inferred that in at least some instances

a right of abandonment may exist in favor of an innocent

owner,

Whether the right of abandonment extends to the situa-

tion of a vessel sunk through the negligence of the master

or crew, without the privity or knowledge of the owner, is a

question not reached in the present posture of this case. It

is true that in In Re Pacific Far East Line Inc., 314 FS.

1339 (N.D. Cal. 1970) the District Court, after trial of the

merits of the limitation proceeding, denied the owner’s

right to limit as to removal expenses where the wreck had

been caused by negligence of the master and crew. The ;

court held in effect that the imputed negligence of the }

owner’s servants placed upon the owner the obligation to i

remove the wreck. That result need not follow where no

negligence of the owner’s servants has been established.

2. The decision below sanctions a departure from the

accepted and usual course of judicial proceedings in

denying the concursus of a limitation proceeding,

before trial of the merits, although there are multi-

ple potential in rem claims greatly exceeding the

limitation fund.

For the purpose of the questions now presented it is

significant that the Pacific Far East case did not involve

an attempt to divorce the claim for removal expenses from

the limitation proceeding. In In Re Midland Enterprises,

Inc., 296 FS. 1356 (S.D. Ohio 1968) the court recognized

the question whether negligence of master and crew, as

opposed to owner, would give rise to removal responsibility

and hence personal liability for removal costs but properly

ruled that the question should be passed until trial of the

merits of the limitation proceeding.

Considerations of substance as well as procedural effi-

ciency dictate that the sume approach be adopted in the

present case. In view of the compulsory pilotage, it is not

clear before trial on the merits that the rule of the Pacific

Far East case, should it be eventually adopted by this

Court, would be applicable to the facets. Tf it should appear

that the sinking resulted solely from the negligence of the

compulsory pilot, there would be no basis, as in Pacific Far

Last Line, for imputing the negligence to the owner.

OTR OLLIE LEAN T LE TEE I IN TE STL EN OE TET RT ITT ITE NR IIT LTC CR RMN

The courts below assumed that the result of respond-

ent’s claim for wreck removal expenses would necessarily

be all or nothing—no liability or unlimited liability. This

ignored the real possibility that the owner, if free of fault,

might avoid personal liability notwithstanding the possible

in rem liability of the vessel under 33 U.S.C. § 412 flowing

from the negligence of the compulsory pilot. The case there-

fore potentially involyes the classic situation demanding the

concursus of a limitation proceeding; multiple claimants .

and an inadequate fund. Lake Tankers Corp. v. Henn, 354

U.S. 147, 154.

Recognizing the inconvenience and inefficiency of per- |

mitting litigation in widely separated districts arising from

the same occurrence, the Court of Appeals conditioned its

affirmance upon the agreement of all parties to litigate in

the Southern District of New York. It thus attempted to

accomplish in a left handed manner the convenience and

efficiency which could more readily be achieved by requiring

all claims to be adjudicated within the limitation proceed-

ing, a solution which would not have prejudged the ques-

tion whether, upon the facts as ultimately developed, the

claim for removal expenses may be subject to limitation,

Just v. Chambers, 312 U.S, 383, 386.

CONCLUSION |

For these reasons, a writ of certiorari should issue

to review the judgment and opinion of the United States

Court of Appeals for the Second Circuit.

Respectfully submitted,

Davin C, Woop

Benvsamin I, Hauver

Daniext K, Reap

Counsel for Petitioner

One World Trade Center

Suite 5215

New York, N. Y. 10048

“ =r ee ee ee ee

ak aka AE EDTA

APPENDIX

Opinion of the District Court

UNITED STATES DISTRICT COURT

Soutuern District oy New York

71 CIV. 161

“h

In The Matter

Of the

Complaint of Cuixese Maritime Trusr, Lrp., as Owner of

the Steamship Sian Yung, for Exoneration from or

Limitation of Liability.

ray

The SS. Sian Yung sank in the Panama Canal on

December 6, 1970 and has remained there ever since. Its

owner, Chinese Maritime Trust, Ltd., petitioned this Court

on January 12, 1971 for exoneration from or limitation of

liability pursuant to 46 U.S.C. §4 183-185, and 188 and

Rule F of the Admiralty Rules. On January 18, 1971

Judge Cannella of this Court restrained the commence-

ment or prosecution of all suits to recover damages for

loss resulting from this casualty, and approved the owner’s

stipulation for value of $16,246.57, The cargo claimant,

Republic of Vietnam, has claimed damages of approxi-

mately $1,600,000, Judge Cannella’s order also required

all parties with claims against the owners to file them in

the limitation proceeding by March 2, 1971,

The Panama Canal Company, a government-owned cor-

poration, now moves for a declaration that an action for

the costs of removal of a wreck obstructing navigable

waters of the Panama Canal Zone is not subject to the

restraining order, Wstimated costs of removal are given

us $2,000,000,

~ ry

Opinion of the District Court

The issue before this court is whether the Canal Com-

pany’s claim for removal costs is subject to limitation and

must therefore be included in the limitation proceeding at

this stage, a question of first impression in this Cireuit.'

The Canal Company’s right of action arises under 35

C.F.R. § 117.5, which states:

Control of wrecked, injured, or burning vessels.

When a vessel in Canal Zone waters goes aground,

or is wrecked, or is so injured that it is liable to be-

come an obstruction in such waters, or is on fire, the

Canal authorities shall have the right to supervise

and direct, or to take complete charge of and con-

duct, all operations which may be necessary to float

the vessel, to clear the wreckage, to remove the in-

jured vessel to a safe location, or to extinguish the

fire, as the case may be. The Canal authorities may,

when necessary, take such action without awaiting

the permission of the owner or agent of the vessel,

and may require the master of the vessel and all

persons under his supervision and control to place

the vessel, and all equipment on board, at the dis-

posal of the Canal authorities without cost to the

Canal. Unless the Panama Canal Company is sub-

sequently found and determined to be responsible

for the accident or the condition necessitating action

by the Canal authorities, the necessary expenses

incurred by the Canal in carrying out the provisions

of this section shall be a proper charge against such

vessel, her owners and/or her operators.

‘A similiar question—whether removal costs arising under the

Rivers and Harbors Act are subject to limitation—was expressly

reserved by the ire Court in Wyandotte Transportation Co, v.

United States, 389 U.S. 191, 205 n. 17 (1967). See also Comment,

Removal of Obstruction from Navigable Waters, 48 N.C.L. Rev.

553, 566-72 (1970).

ah Pera

Opinion of the District Court

A ship’s owner can limit its liability for losses caused

by the ship under 46 U.S.C. § 183 only if those losses were

incurred ‘without the privity or knowledge of such owner

or owners.’’* Liability for removal costs under § 117.5

arises from the obligation imposed by the regulation itself

upon the ship owner to remove the wreck or pay for its

removal by the Canal Company. The obligation came

within the privity and knowledge of the ship’s owner once

it became aware that its vessel was obstructing navigation

in the Panama Canal. In effect, the court holds that

liability for expenses of the Canal Company in removing

wrecks pursuant to 35 C.F.R. § 117 is in this case with

the privity and knowledge of the owners, and therefore

not subject to limitation, as a matter of law."

In so doing, we follow the reasoning of In Le Pacific

Far East Line, Inc., 314 F. Supp. 1339, 1349 (N.D. Cal.

1970), which held that an owner could not limit liability

for wreck removal expenses imposed by the Rivers and

Harbors Act (33 U.S.C, § 409). The Court stated: **The

statutory duty to diligently remove the wreck is a man-

datory obligation personal to the owner and the failure

to so remove is within the privity and knowledge of the

owner,”’ Id.

There is no indication in the Limitation of Liability

Statute, first enacted in 1851, that the costs to the owner

* 46 U.S.C, § 183(a):

“The liability of the owner of any vessel . . . for any loss,

damage, or injury by collision, or for any act, matter or thing,

loss, damage, or forfeiture, done, occasioned, or incurred, with-

out the privity or knowledge of such owner or owners, shall

not. . . exceed the amount or value of the interest of said

owner in such vessel, and her freight then pending.”

* This case thus differs from J. Ray McDermott & Co. v. Hunt

Oil Co., 262 F.2d 127 (Sth Cir. 1959) and In the Matter of the

Petition of Panoceanic Tankers Corporation, 67 Civ, 4489 (S.D.NLY.

Jan, 12, 1969), where the question of privity and knowledge was a

factual one to be determined in the limitation proceeding,

eR EN.

7 Sera gs 1

ZOE INMLID GOCE NZ OG

Opinion of the District Court

of removing the wreck of his vessel were to be limited.

Nor does the background of the Rivers and Harbors Act,

now construed to require shipowners to pay for removal,

suggest an answer to this question.

Two policies expressed in recent court rulings, however,

point in the direction of our conclusion. First is the re-

newed vigor which the Supreme Court has read into the

Rivers and Harbors Act, one of whose aims is to insure

the prompt elimination of obstructions to navigation.

United States v. Republic Steel Corp., 362 U.S. 482 (1960) ;

Wyandotte Transportation Co. v. United States, 389 U.S.

191 (1967). Second is the disfavor with which expansion

of the limitation of liability statute is viewed. Maryland

Casualty Co. v. Cushing, 347 U.S. 409, 487 (1954) (Black,

J.); In re Barracuda Tanker Corporation, 409 F. 2d (1013)

1015 (2d Cir. 1969). True, if the Canal Company presented

its claim in the limitation proceeding it could still recover

a full in personum judgment if its claim were later found

not to be limitable. Hartford Accident & Indemnity Co. v.

Southern Pac. Co., 273 U.S. 207 (1924). But to paraphrase

the Second Circuit in the Barracuda Tanker case, supra, it

is hard to see how it would foster the purposes of the limita-

tion of liability statutes to delay the Canal Company in

prosecuting its action for the costs of removing the SS.

Sian Yung from the Canal. We find it hard to believe that

Congress’ intent to promote investment in shipping ex-

tended to limiting the costs of removing obstructions to

navigation. Courts in England have found that the func-

tion of their limitation statutes, which are similar to ours,

would not be furthered by limiting costs for wreck removal.*

* Included in the sparse history of the limitation of shipowner's

liability act of 1851, the forerunner of today’s statute, is the follow-

ing comment of Senator Hamlin, Chairman of the Senate Committee

on Commerce, who introduced the bill: “Why not give those who

navigate the ocean as many inducements to do so as England has

done? . . . That is what this bill seeks to do and no more.” Senator

Davis said: “It is simply placing our mercantile marine upon the

same footing as that of Great Britain.” Quoted in Gilmore and

Black, The Law of Admiralty, 664 n.5 (1957).

Opinion of the District Court

See The Stonedale No. 1, [1954] 2 All. E.R. 170, aff’d

[1955] 2 All. E.R. 689.

Defendants contend that we should not at this juncture

decide that the Canal Zone’s claims are not limitable be-

cause negligence by the shipowners must be shown before

they are liable for removal costs. This is true under $15

of the Rivers and Harbors Act, supra, where the owners

must pay for removal only if the vessel was negligently

sunk. Wyandotte Transportation Co. v. United States,

supra, at 413 n. 6,420.5 Section 117.5 of the Canal Zone

regulation does not by its terms make recovery contingent

on proof that the vessel was negligently sunk, though the E

Canal Company seems to take the position that negligence ‘

is indeed one element of its case (Canal Company brief, 3

at 8). >

In the view we take of the case we need not now decide a

whether 35 C.F.R. 117.5, which has never been judicially ;

interpreted, empowers recovery only where the owners or

operators of the ship are negligent or whether the owners

are absolutely liable for the costs of removing their vessel.

We are not granting judgment for the Canal Company on

its claim; we merely hold that if they do recover, that

recovery is not limitable. If negligence is in fact an element

of the Canal Company’s ease and is not proved, the owners

are free to defend and prevail on that ground.

The same applies to the owner’s contention that they

are not liable under § 117.5 if the Canal Company is found

responsible for the sinking. That section prevents the

Canal Company from recovering costs if it is ‘‘found and

determined to be responsible for the accident.’’ In its

affidavit Chinese Maritime Trust states that a Board of

Local Inspectors in the Canal Zone, after holding an in-

quiry, found the Canal Company’s pilot and certain of the

ATA a (ite ty

* Section 15 of the Rivers and Harbors Act speaks of vessels

“voluntarily or carelessly” sunk, 33 U.S.C. § 409, and the Govern-

ment in Wyandotte was proceeding under a theory of negligence.

Opinion of the District Court

vessel’s crew at fault. This finding, we take it, is men-

tioned to imply that there is some likelihood the Canal

Company will ultimately be found responsible for the ac-

cident. We are not deciding the merits of that defense

now, and it remains available to Chinese Maritime Trust

in the Canal Company’s separate action.

Chinese Maritime Trust and the cargo claimant, the

Republic of Vietnam, urge retention of the Canal Com-

pany’s claim in the limitation proceeding on the further

ground that common questions of fact will be presented in

the limitation proceeding and in the action for removal

costs. These parties point to possible inconsistencies in

determination, as well as the inconvenience they will suffer

by participating in proceedings here and in the Canal

Zone.° Evidently the cargo claimant, Republic of Vietnam,

intends to claim against the Canal Company for loss of the

cargo, and would prefer to do so in the limitation proceed-

ing.

In favor of their effort to keep the Canal Company’s

claims at issue here within the limitation proceeding, these

parties state that one of the purposes of the limitation

statutes is ‘‘to bring into one court, at one time, all of the

claims arising out of a maritime disaster’ (brief of

Chinese Maritime Trust, at 8), what Justice Frankfurter

in Maryland Casualty Co. v. Cushing, 347 U.S. 409, 415-

16 (1954), called the concourse theory. But ‘‘[i]t cannot

be said .. . that the concourse theory is today in a flourish-

ing state... ,’’ particularly in the Second Circuit. Gil-

more and Black, supra, at 730. In Petition of Texas Co.,

213 F. 2d 479, 482 (2d Cir. 1954), Judge Frank effectively

answered the contentions made here. Except when neces-

* Just what issues of fact will be common to both proceedings

has not been made particularly clear. We assume that the limitation

proceeding will touch on the issue of causation only so far as is

necessary to determine whether the events causing the sinking were

within the owner’s privity and knowledge.

Opinion of the District Court

sary to protect an insufficient fund ‘‘... (1) the statutory

privilege of limitation is not in the nature of a forum non

conveniens doctrine, and (2) the statute gives a ship-owner,

sued in several suits (even if in divers places) by divers

persons, no advantage over other kinds of defendants in

the same position.’’ See also, In re Lake Tankers Corp.,

232 F. 2d 573 (2d Cir. 1956), aff’d sub nom., Lake Tankers

v. Henn, 354 U.S. 147 (1957). Since we have already found

that the Canal Company’s claim is not limitable, there

is no need to bring its claim into concourse in order to pro-

tect the fund now before the court.

For the above reasons, we find that the Panama Canal

Company’s action for the costs of removal of the SS. Sian

Yung from the Panama Canal should not be subject to the

injunction in the restraining order in this action. Submit

order on 5 days notice.

Dated: New York, New York

April 28, 1972

Constance Baker Mortiey

U.S.D.J.

Pete OL Ye tn ee "

Order of the District Court

UNITED STATES DISTRICT COURT

SoutHeErn Disrricr or New York

71 Civ. 161

In The Matter

Of the

Complaint of Cutxesr Maritime Trust, Lrp., as Owner of

the Steamship Sian Yung, for Exoneration from or

Limitation of Liability.

Panama Canai Company, appearing specially, having

moved this Court pursuant to Rule 12 of the Federal Rules

of Civil Procedure, for an order declaring that an action

for the costs of removal of a wreck obstructing navigable

waters of the Panama Canal Zone was not subject to the

injunction contained in the restraining order filed in this

limitation proceeding and that this Court thereby lacked

jurisdiction over the subject matter of that claim and over

the Panama Canal Company, and for such other and further

relief as to the Court may seem just in the premises, and

said motion having come on for a hearing before this Court

on the 21st day of April 1971, and Whitney North Seymour,

Jr., United States Attorney, and Louis E. Greco, Attorney

in Charge, Admiralty and Shipping Section, Department

of Justice, having appeared by Philip A. Berns, Esq., in

support of said motion for Panama Canal Company, and

David C. Wood of Hill, Betts & Nash, attorney for Chinese

Maritime Trust, Ltd., and John F. O’Connell of Lord, Day

& Lord, attorneys for Republic of Vietnam, having ap-

peared in opposition to said motion, and said motion having

Order of the District Court

been orally argued and the Court after having read the

memoranda and affidavits submitted by the parties, and

after due deliberation having filed a Memorandum Opinion

of April 28, 1972, granting the motion of Panama Canal

Company, and having directed that an order be submitted

on five days’ notice, it is

Now, on the motion of Whitney North Seymour, Jr.,

United States Attorney, and Gilbert S. Fleischer, Attorney

in Charge, Admiralty and Shipping Section, Department

of Justice, attorneys for Panama Canal Company, appear-

ing specially herein,

OrverED, that the motion of Panama Canal Company be

granted in all respects, and, it is

FURTHER ORDERED that an action for the costs of re-

moval of the Sian Yung is not subject to the injunction con-

tained in the restraining order filed in this limitation

proceeding.

Dated: New York, N. Y.

May 30, 1972

s/ Constance Baker Morey

U.8.D. J.

10a

Opinion of the Court of Appeals

UNITED STATES COURT OF APPEALS

For tHE Seconp Circuir

——

No. 747—September Term, 1972

(Argued April 23, 1973 Decided April 30, 1973)

Docket No. 72-1968

In the Matter of the Complaint of

Cuinese Maritime Trust, Lp.,

Plaintiff-Appellant,

as Owner of the Steamship Sian Yunc, for Exoneration

from or Limitation of Liability.

Repusiic oF VietNam and ‘onc Cuoc Trep Te (General

Supply Agency) and Union Textie Corp., et al.,

Cargo Claimants,

Panama CanaL Company,

Appellee.

Before:

BreEIvenstEIN,* KaurMan and MansFIeELp,

Circuit Judges.

* Of the United States Court of Appeals for the Tenth Circuit,

sitting by designation.

lla

Opinion of the Court of Appeals

Appeal from a declaratory order of the United States

District Court for the Southern District of New York, Con-

stance Baker Motley, Judge, holding that an action by the

Panama Canal Company against a shipowner for recovery

of expenses incurred to remove the wreckage of the own-

er’s ship which obstructed navigable waters of the Panama

Canal Zone is not subject to an injunction issued in a pro-

ceeding brought by the owner to limit its liability to its

interest in the vessel and her then pending freight pursuant

to the Shipowners’ Limited Liability Act, 46 U.S.C. ¢§ 183-

185, 188.

Affirmed on condition that the parties consent to litiga-

tion in the United States District Court for the Southern

District of New York of all claims arising out of the sink-

ing of the ship.

Davw (. Woop, Esg., New York, N. Y. (Daniel

K. Read, Esq., Hill, Betts & Nash, New York,

N. Y., of counsel), for Plaintiff-Appellant.

Priuiep A. Berns, Attorney, Admiralty and Ship-

ping Section, Department of Justice (Harlington

Wood, Jr., Assistant Attorney General, Whit-

ney North Seymour, Jr., United States Attor-

ney, Southern District of New York, Gilbert 8S.

Fleischer, Attorney in Charge and Warren A.

Schneider, Attorney, Admiralty and Shipping

Section, New York, Department of Justice, New

York, N. Y., of counsel), for Panama Canal

Company.

Mansrieup, Circuit Judge:

On December 6, 1970, the S.S. Sian Yung, owned by Chi-

nese Maritime Trust Ltd., sank in the Panama Canal. Since

the sunken hull obstructed travel by vessels in this heavily

EERE PRE NM EESETCET RT AR MAI RRIF TPES TORN OR RST PLR

Tait AnGteg2vud it

12a

Opinion of the Court of Appeals

traversed navigable waterway, removal efforts were com-

menced by the Panama Canal Company (‘‘Canal Co.’’), an

agency of the United States, after the latter had been ad-

vised by the owner that it had abandoned the vessel to its

insurance underwriter and that the underwriter did not

intend to undertake removal of the vessel. Meanwhile the

owner, faced with cargo claims of at least $1.6 million and

a claim by the Canal Co. for wreck removal expenses,

which were then estimated at $800,000 by the owner and

later at $2 million by the Canal Co., commenced a proceed-

ing in the Southern District of New York for limitation of

the owner’s liability to its interest in the vessel and her

then pending freight, pursuant to the Shipowners’ Limited

Liability Act, 46 U.S.C. §§ 183-185, 188 (‘‘Limitation Act’’),

and Rule F of the Admiralty Rules. An ad interim stipu-

lation of value for the wreck and its pending freight in the

amount of $16,246.57 was approved, and the usual monition

and restraining order enjoining the commencement of other

proceedings in any jurisdiction for damages resulting from

the casualty pending a determination in the limitation pro-

ceeding were given.

From an order of the district court declaring that the

Canal Co.’s claim for wreck removal costs ' is not subject

to limitation or the restraining order, the owner appeals.

Subject to the conditions noted below, we affirm, sub-

stantially for the reasons stated in Judge Motley’s opinion,

—— F. Supp. —— (S.D.N.Y. 1972).

? On appeal the Canal Co. urges that expenditures it has made

to clean up oil pollution resulting from leakage from the sunken ves-

sel give rise to a claim under relevant portions of the Oil Pollution

Act, 33 U.S.C. § 1161(a)(5), (b) (1), (£)(1), (nm), which it argues

is also not subject to limitation. As that contention was not pre-

sented to or considered by the district court, however, it is not prop-

erly before us on appeal and we do not pass on its validity.

13a

Opinion of the Court of Appeals

The Limitation Act was enacted in 1851 as a measure

designed to promote investment in American shipping in

competition for world trade. It permits a shipowner to

limit his liability to the amount of his interest in a ship

and her pending freight ‘‘for any loss, damage, or injury

by collision, or for any act, matter, or thing, loss, damage,

or forfeiture, done, occasioned, or incurred without the

privity or knowledge of such owner or owners... .’? 46

U.S.C. § 183(a). The Act must be construed, however, in

the light of subsequently-enacted legislation and regula-

tions designed to insure that our country’s navigable water-

ways will be kept free of obstructions. Section 15 of the

Rivers and Harbors Act of 1899, 33 U.S.C. § 409, some-

times called the Wreck Removal Act, for instance, pro-

vides that

‘‘whenever a vessel, raft, or other craft is wrecked

and sunk in a navigable channel, accidentally or

otherwise, ... it shall be the duty of the owner of

such sunken craft to commence the immediate re-

moval of the same, and prosecute such removal

diligently, and failure to do so shall be considered as

an abandonment of such craft, and subject the same

to removal by the United States as provided for in

sections 411 to 416, 418, and 502 of this title.’’

In Wyandotte Transportation Co, v. United States, 389

U.S. 191, 205 (1967), the Supreme Court, holding that

where a ship was negligently sunk in navigable waters and

thereafter abandoned, the Government could recover wreck

removal costs from the shipowner, indicated that the re-

covery would not be subject to limitation under the Limita-

tion Act, since the owner would have had ‘privity or

knowledge’? within 46 U.S.C. § 183(a). Speaking for a unan-

imous court, Justice Portas noted that ‘* the duty imposed

by and the remedy provided in the final clause of § 15

l4a

Opinion of the Court of Appeals

[are] not prescribed only for owners of negligently sunk

vessels. Those provisions apply ‘whenever a vessel . . .

is wrecked and sunk in a navigable channel, accidentally

or otherwise... .’ ... We believe the sections noted

by petitioners are intended to protect the United States

against liability for removing a sunken vessel if it chooses

to do so.’’ (Emphasis supplied), 389 U.S. at 206-07."

Pursuant to the Canal Zone Code, ch. 81, Shipping and

Navigation § 1331 (which authorizes the President to pre-

scribe regulations governing the passage and control of

vessels through the Panama Canal) and 3 U.S.C. §301,

in turn, President Johnson, by Executive Order 11305,

delegated to the Secretary of the Army the power to adopt

regulations pertaining to the removal of wrecked vessels

from the Canal. Thereafter Title 35, ch. 1, of the Code of

Federal Regulations was adopted, which provides in § 117.5

* Recently, moreover, the Supreme Court, in unanimously up-

holding Florida’s Oil Spill Prevent and Pollution Control Act over

the proffered objection that the federal Water Quality Improvement

pod -_—™ 33 U.S.C. §§ 1161, et seq., precluded state regulation,

observed:

“If Florida wants to take the lead in cleaning up oil spillage

in her waters, she can use § 12 of the Florida Act and recoup

her costs from those who did the damage. Whether the amount

of costs she could recover from a wrongdoer are limited to

those specified in the Federal Act and whether in turn this new

Federal Act removes the pre-existing limitations of liability in

the Limitation of Liability Act are questions we need not reach

here. Any opinion on them is premature. It is sufficient for

this day to hold that there is room for state action in cleaning up

the waters of a State and recouping, at least within federal limits

so far as vessels are concerned, her costs.” Askew v. The

American Waterways Operators, Inc., 41 U.S.L.W. 4507, 4509

(April 18, 1973).

While the question of the effect of later statutes of Congress on the

Limitation Act is thus left open, the policy of allowing recoupment

of wreck removal or clean-up expenses incurred by government agen-

cies which have undertaken these tasks is evident.

lia

Opinion of the Court of Appeals

that when a vessel becomes an obstruction in the Panama i

Canal the Canal authorities may remove it without await- f

ing permission of the owner and that unless the Canal :

Co. is subsequently found responsible for the accident or

condition necessitating the removal of the wreck, the nec-

essary expenses incurred by it shall be a proper charge

against the owner.*

Thus, although responsibility for expenses ineurred in

removing a wreck from the Panama Canal may ultimately

be laid at the door of the negligent party or parties, the

immediate obligation to remove the obstruction has heen

imposed, both by statute and by regulation, upon the ship-

owner, regardless whether the sinking was caused by his

negligence. Confronted with this duty the owner cannot

*“8§ 117.5 Control of wrecked, injured, or burning vessels,

“When a vessel in Canal Zone waters goes aground, or is

wrecked, or is so injured that it is liable to become obstruction

in such waters, or is on fire, the Canal authorities shall have the

right to rp and direct, or to take complete charge of and

conduct, all operations which may be necessary to float the ves-

sel, to clear the wreckage, to remove the injured vessel to a safe

location, or to extinguish the fire, as the case may be. The

Canal authorities may, when necessary, take such action without

awaiting the permission of the owner or agent of the vessel, and

may require the master of the vessel and all persons under his

supervision and control to pa the vessel, and all equipment

on board, at the disposal of the Canal authorities without cost

to the Canal. Unless the Panama Canal Company is subse-

quently found and determined to be responsible for the accident

or the condition necessitating action by the Canal authorities,

the necessary expenses incurred by the Canal in carrying out the

provisions of this section shall be a proper charge against such

vessel, her owners and/or her operators.”

‘It is true that the owner may fail to perform its “duty to com-

mence the immediate removal” of the wreck, 33 U.S.C. § 409, and

that its “failure to do so shall be considered as an abandonment of

such craft,” id. However, § 409 does not provide the limits of the

owner’s responsibility in the matter. Upon abandonment the owner

risks exposure to heavy personal liability for wreck removal expenses

incurred by the Government if the latter proves that the sinking was

due to the owner's negligence. See Wyandotte Transportation Co.,

supra,

SOREN eI EAR NMR mE SME A I RCO IER RVES NAT TERRE AERC MERE HOSES ACARD A SPE PG

l6a

Opinion of the Court of Appeals

contend that its failure to remove the vessel and the con-

sequent expense of removal incurred by the Canal Co. is

‘without [its] privity or knowledge,’’ which is a condition

precedent to its invocation of the Limitation Act. To hold

otherwise would be to permit the owner, by limiting its

liability to the value of the sunken hull, to thwart the

strong public policy in favor of creating an incentive on

the part of the owner promptly to remove its obstructing

ship from navigable waterways.’ See Wyandotte T'rans-

portation Co. v. United States, 398 U.S. 191 (1967); In re

Pacific Far East Line, Inc., 314 F. Supp. 1339, 1349 (N.D.

Cal. 1970). We therefore hold that the Canal Co.’s claim

is not limitable. Accordingly it may be the subject of an

in personam suit by the Canal Co. against the shipowner.

In so holding we intimate no view as to the merits of the

Canal Co.’s claim or the defenses or counterclaims that

may be asserted by the owner against it.

In In re Highland Nav. Corporation, 24 F.2d 582, 584

(S.D.N.Y. 1927), affd., 29 F.2d 37 (2d Cir. 1928), the district

court stated “a shipowner whose vessel has been wrecked and sunk

without his fault has a right to abandon it and . . . is not under any

oe . ++ to... remove it” in view of § 20 of the Rivers and

Harbors Act, 33 U.S.C, § 415, which provides that wreck removal

expenses incurred by the Government “shall be a charge against

such craft and cargo.” However, that conclusion has been super-

seded by the Supreme Court's later statement in Wyandotte that the

= language of § 20 “does not lead to the conclusion that the

vernment possesses no other right to recover. The phrase merely

pa the lien interest of the United States.” 389 U.S. 191,

n.20.

® The shipowner’s performance of its duty to remove does not

preclude it from seeking recovery of its wreck removal expenses from

others to the extent that their negligence caused the wreck, just as

the Canal Co, may recover such expenses from the shipowner to the

extent that its negligence was a cause of the sinking. See United

States v. Moran Towing & Transportation Co., 409 F.2d 961 (4th

a 1973): In ve Marine Leasing Services, Inc., 471 F.2d 255 (Sth

ir. ,

17a

Opinion of the Court of Appeals

More troublesome is the owner’s contention that, regard-

less whether the Canal Vo.’s claim is not limitable, all

claims arising out of the sinking of the Sian Yung should

us a matter of equity be prosecuted solely in the pending

limitation proceeding rather than become the subject of

litigation in other districts, with possible multiple trials

of the same issues and duplicative proliferation, waste and

inconvenience for all concerned. In support of this position

the owner relies principally upon Justice Frankturter’s

espousal in Maryland Casualty Co. v. Cushing, 347 U.S.

409, 415 (1954), of the limitation proceeding as providing

the ‘*benefit of a concursus’’ in which all claims would be

disposed of in one action.

Although the ‘‘concursus’’ theory has not been looked

upon with favor by this circuit, at least in cases where

the fund may be adequate to satisfy all claims, see In re

Lake Tankers Corp., 232 F.2d 573, reaffirmed en banc, 235

F.2d 783 (2d Cir. 1956), affd. sub nom. Lake Tankers Corp,

V. Henn, 354 U.S, 147 (1957); Petition of Trinidad Corp.,

229 F.2d 423, 428 (2d Cir. 1955); Petition of Texas Co.,

213 F.2d 479 (2 Cir.), cert, denied, 348 U.S. 829 (1954) ;

Gilmore & Black, The Law of Admiralty § 10-41 at 728-32

(1957), it is unquestionably true that if the Canal Co.

pursued its claim for expenses of wreckage removal in a

separate action in the Canal Zone, as it originally intended,

the owner and perhaps some of the cargo claimants would

he foreed to engage in duplicative litigation of identical

issues in these two widely separated districts. When we

pointed this out upon oral argument counsel for the Gov-

ernment, recognizing that such a course would he wasteful

and inconvenient not only for the parties but for the courts

involved, commendably stated that he would recommend

that the Canal Co. institute its suit against the owner in

Sng aeys

Fa ge ay eee ee

18a

Opinion of the Court of Appeals

the United States District Court for the Southern District

of New York. That course will permit litigation of all

claims before one judge under that district’s individual

calendar system, thus minimizing expense and delay. Ac-

cordingly we affirm the decision of the district court on

condition that all parties consent to litigation in the United

States District Court for the Southern District of New

York of all claims arising out of the sinking of the S.S.

Sian Yung.

. i “ ee

t ee et eS TP eS STN ee me ne aes J

Tee ee Ce

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.