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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1974
- **Citation:** 414 U.S. 1143

## 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,
v.

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

ii

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

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IN THE

Supreme Court of the United States

October Term, 1973
No.

| Cuinese Maritime Trust, Lv., ete.

Petitioner,
Vv.

| PanaMa CanaL Company,
Respondent,

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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

3

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.’’

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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

4

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.’’

‘
3
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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,’’

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5

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
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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

10

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)

11

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

12

‘*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,

a

13

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

14

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

la

APPENDIX
Opinion of the District Court
UNITED STATES DISTRICT COURT

Soutuern District oy New York
71 CIV. 161

“h
Vd

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
Vv

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

2a
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

3a
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

4a
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).

da
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.

=
&

6a
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.

7a
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 "

8a

Order of the District Court
UNITED STATES DISTRICT COURT

SoutHeErn Disrricr or New York
71 Civ. 161

a
Vv

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.

).
Vv

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

9a
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.

a
z
i}
4
co

10a

Opinion of the Court of Appeals
UNITED STATES COURT OF APPEALS

For tHE Seconp Circuir

——
Vv

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.

ne
Vv

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385607_1206%3A1. Public record. Not legal advice.