Brief for the Respondent in Opposition — Standard Oil Co. of NJ v. Southern Pacific Co.

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1923, No. 607.

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STANDARD O1L CoMPANY (NEW JERSEY),

Petitioner,

AGAINST

THE SOUTHERN PAacIFIC COMPANY AND

JAMES C. Davis, DireEcTOR GENERAL OF

RAILROADS,

Respondents.

BRIEF FOR RESPONDENTS IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

This is a proceeding for limitation of the liability

of Standard Oil Company (N. J.), as owner of the steam-

ship Cushing, with which has been consolidated the pro-

ceeding for limitation of liability by the Southern Pacific

Company, as owner of the steamship Proteus, and the

Director General of Railroads, who was in possession of

the Proteus under the Act of August 29th, 1916, and

the proclamation of the President of December 26, 1917,

at the time of the collision between the Cushing and the

Proteus. The collision occurred August 19, 1918, and re-

sulted in the sinking and total loss of the Proteus.

The District Court for the Southern District of New

York (L. Hand, J.) held both vessels in fault and re-

ferred the question of damages to a commissioner, who

found the value of the Proteus at the time of the col-

lision to be $750,000. Mack, C. J., confirmed the report,

2

and a final decree was entered apportioning the damages,

giving the owners of the cargo a full recovery, and strik-

ing a balance in favor of the Southern Pacific Company ,

and the Director General of Railroads of $200,448.89,

“being one half of the difference between the amount

of their damages * * * interest * * * and costs,

and the damages sustained by Standard Oil Company

(N. J.) as owner of the Cushing with interest * * *

and costs, including the amount paid by the Standard

Oil Company (N. J.) to the cargo claimants” (Record,

Vol. I, fols. 2692-3).

The Circuit Court of Appeals affirmed the decision

on the merits, and increased the value of the Proteus

to $1,225,000, which, on the apportionment of damages,

would give the Southern Pacifie Company and the Di-

rector General of Railroads a recovery of about $500,000.

I. NO NOVEL OR IMPORTANT QUESTION OF LAW IS IN-

VOLVED IN THIS APPLICATION,

The only question raised is the value of the

Proteus. |

All the witnesses on both sides adopted the same

method of determining value, viz., the cost of repro-

duction less 18 years’ depreciation. This is. the

method adopted by this Court in the rate-making cases, |

Knoeville ys. The Knorville Water Company, 212 U. 8.

1, and Denver vs. Denver Water Company, 246 U. 8. 178.

In the latter case Mr. Justice Pitney said: y. |

“What we have said establishes the propriety of esti-

mating complainant's property on the basis of present

market value as to land, and reproduction cost, less de-

preciation, as to structures” (p. 191).

3

The claimant's witnesses were Martin, a marine sur-

veyor and appraiser of more than 35 years’ experience,

who was a member of the Ocean Advisory Board on Just

Compensation (1586), Smith, President of the New York

& Cuba Mail Steamship Company (Ward Line) (1636),

and Raymond, President of the Clyde and Mallory lines

(1758). Their valuations ranged from $1,225,000 to

$1,850,000 (Commissioner's report, 2507, 2513, and

2515).

The petitioner's witnesses were Morrell, employed in

the Construction Department of the Standard Oil Com-

pany (1829), Gillmor, a naval architect and member of

the Joint Merchant Vessel Board, which appraised ves-

sels that might be requisitioned by the Government

(1891-1900 and 1949 and 1951), and Swasey, vice-presi-

dent of Hereshoff Manufacturing Company (2045).

Their valuations ranged from $611,000 to $630,000 (Com-

missioner’s report, 2520, 2525 and 2528).

The difference in the estimates of the two sets of wit-

nesses was due either to a different replacement cost or a

different rate of depreciation or both. The witnesses for

the Proteus took the replacement cost as $1,750,000.

Mr. Palen, vice-president of the Newport News ¢ ‘ompany,

gave the precise cost of reproduction as $1,755,450

(2127-8). a ae

Morrell, for the petitioner, started w ith 31 ,670,000 as

the cost of reproduction (1850-2) and used a depreciation

rate of 4% for 14 years and 214% for four years (1853).

Gillmor conceded that reproduction less depreciation was

a correct rule (1936, 1937) and said that “214 times the

first cost would be a liberal reproduction cost of the

Neen ne eS

Proteus” (1943). This would make the reproduction cost

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$1,375,000, and he fixed her value at .452 of this cost in

accordance with a table which he had used in appraising

vessels of various ages. Swasey thought $1,400,000 “about

right” as a replacement value and using the same table as

}illmor “depreciated the price to $61 1,000° (2058-9).

The Proteus witnesses adopted 214% to 3% as

a fair and reasonable rate of depreciation, taking

into consideration the extraordinarily high standard of

up-keep maintained by the Southern Pacific Company

for its vessels (Martin, 1609 and 1622-5; Raymond, 1791;

Smith, 1671).

The difference between the conclusion of the Commis-

sioner and Judge Mack on the one hand and that of the

Circuit Court of Appeals on the other, is that the Circuit

Court of Appeals regarded the estimates of Martin, Ray-

mond and Smith as more weighty than those of the peti-

tioner’s witnesses. In the District Court the learned Cir-

cuit Judge conceded that “the cost of reproduction less

depreciation has been commonly adopted as a standard

for rate-making purposes” (2568), but he noted a recent

“tendency among legal and economic writers to bring to

the fore the prudent inyvestment_standard” (2569). He

did not, however, follow this out, but contented himself

with discounting “the cost of reproduction” (2574).

The Circuit Court of Appeals said:

“We think the greater weight of persuasive testimony

favors the proof offered on behalf of the Proteus as to

value and that the rate of depreciation was fair and

reasonable under all the circumstances” ‘)pinion).

Thus it is evident that there is no novel or important

question of law raised by this application. It may seem

startling that a vessel which cost less than $600,000 in

5

1900 should be worth $1,225,000 eighteen years later, but

that was what happened all over the world during the

war. An interesting example of increased values is the

case of the Havana and Saratoga, two steamships of the

Ward Line built in 1906 at a cost of $900,000 each (Smith,

1651, 1654-5) and appraised in 1917 by the Joint Board,

of which the petitioner's witness Gillmor was a member,

at $2,240,000 each and paid for at that rate by the

Government (1653-7).

II. THERE IS NO MERIT IN THE PETITIONER'S CON'TEN

TION THAT THE SOUTHERN PACIFIC COMPANY IS BARRED

FROM RECOVERY IN CASE IT HAS MADB A SETTLEMENT WITLI

THE DIRECTOR GENERAL OF RAILROADS.

The petitioner’s argument is that the Southern Pacific

Company is “the innocent injured party seeking only to

recover for the value of the Proteus” (Brief, p. 29) ; that

the Standard Oil Company and the Director General of

Railroads were “joint tort feasors causing the loss of the

Southern Pacific Company's steamer Proteus” (Petition,

p. 5; Brief, p. 30); that “it has come to the attention of

counsel in this case, through proper and reliable sources,

that a final settlement had been arrived at between the

Railroad Administration and the Southern Pacific Com-

pany by which the liability of the Railroad Administra-

tion for the loss of the Proteus has been finally satisfied

and extinguished by a payment, credit or adjustment, on

the basis of the value found by the Commissioner and

confirmed by the District Court, namely, $750,000" ( Peti-

tion, pp. 5-6) ; and that “the claim which it may have had

for the same loss against the other tort feasor, Standard

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Oil Company (New Jersey) has thereby been extin-

guished” (Brief, p. 30).

“Naturally the facts just noted are not included in the

record on appeal here” (12th article of the Petition,

p. 7).

The petitioner naively asks for a writ of certiorari, not

merely on the grounds usually stated in such applications,

but for the reason that “the peculiar circumstances which

have arisen during the pendency of this litigation * * *

justify a further inquiry into the facts, to determine their

legal effect, and their bearing on the measure of damage

for which your petitioner may be liable” (Vetition,

p. 11).

1. A writ of certiorari brings up the record, and noth-

ing outside the record. Harris v. Barber, 129 U. S. 366;

McClellan vy. Carland, 217 U. 8. 268.

2. The statements of the petition and brief dehors the

record do not sustain the petitioner’s contention as to

the relation of the parties.

It is certainly a fantastic suggestion that the owner

as an innocent party was dealing with the Director Gen-

eral as one of two joint tort feasors.

If the Southern Pacific Company is “an innocent

party” then it must be in the same situation as the owners

of cargo and entitled to a decree for the full amount of

its damages as against the petitioner.

3. The relations of the Southern Pacific Company

and the Director General inter se se are no concern of

the petitioner. At any time in the course of the litiga-

tion, before or after judgment, the Director General of

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7

Railroads could have settled his contractual obligations

to the Southern Pacifie Company in any way that they

might see fit, and either the Southern Pacifie Company or

the Director General, in making a settlement, might re-

serve its rights as against the Standard Oil Company.

The petitioner has not even asserted that the South-

ern Pacific Company released the Director General of

Railroads.

4. The relations between the Southern Pacific Com-

pany and the Director General did not arise out of tort,

but were contractual.

The taking of the Southern Pacific system of trans-

portation under the Act of August 29, 1916, was subject

to just compensation being made, and the President's

proclamation of December 26, 1917, expressly provided

that the Director General should

“enter upon negotiations with the several companies look-

ing to agreements for just and reasonable compensation

for the possession, use and control of their respective

properties * * *”,

Also, the Federal Control Act of March 21, 1918, pro-

vided for just compensation to the carriers and for the

making of agreements therefor between the President

and the carriers. In Section 1 of this Act it was con-

templated

“that the property of each carrier may be returned to it

in substantially as good repair and in substantially as

complete equipment as it was in at the beginning of

Federal control * * *”,

Pursuant to this statute the Director General and the

Southern Pacific Company made an agreement: which was

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put in evidence by the petitioner's counsel, February 3,

1921 (Record, p. 681).

In Section 5(e) of this contract it was provided:

“If, during Federal control, any of the property de-

scribed in paragraph (a) of section 2 hereof [this included

the Proteus] or any replacement thereof or addition

thereto or betterment or extension thereof is destroyed

or damaged by fire or marine casualty, or any of the

floating equipment described in paragraph (a) of section

2 hereof is destroyed or damaged by war risks while in

ocean waters outside of the three-mile limit, and is not

restored or replaced by the Director General, he shall

reimburse the Companies the value of the property de-

stroyed or the amount of the damage at the time of the

loss, and the cost of restoration or replacement or said

value or damage, as the case may be, shall be charged to

annual railway operating expenses, but the same shall

not be considered a charge to such expenses for the pur-

poses specified in paragraph (a) of this section.”

The Director General was bound by contract to make

compensation to the Southern Pacific Company for the

loss of the Proteus, and whether he was negligent or not

had nothing to do with his obligations toward the South-

ern Pacific Company.

5. The petitioner has failed to make out a case for

extraordinary relief.

It had known the relations of the Director Gen-

eral and the Southern Pacific Company since they

filed their petition for limitation of liability July 21,

1919 (98). On the hearing before the Commissioner

December 7, 1920 (1582 and 1630), counsel for the peti-

tioner sought to ascertain whether a settlement had been

made with the Government. It knew that a settlement

was inevitable by virtue of the statutes of the United

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States and the contract made between the Director Gen-

eral and the Southern Pacific Company dated February

19, 1919, which the petitioner put in evidence February

3, 1921, and which contained the provision quoted supra.

The petitioner was further put on notice by Mack,

C. J., in his opinion confirming the Commissioner's re-

port. Referring to the relations of the Southern Pacific

Company and the Director General he said:

“The claimant and the Director-General, I assume,

have come or will come to an agreement regarding their

respective rights as to the interest accruing during the

period of requisition. Unless some agreement has been

reached, I assume that the Government is entitled to the

interest during the period of requisition, and the claim-

ant to its agreed compensation” (2584).

III. THE APPLICATION FOR A WRIT OF CERTIORARI

SHOULD BE DENIED.

October, 1923.

CHARLES C. BURLINGHAM,

Counsel for Southern Pacific Company

and the Director General of Railroads.

M9542

SUPREME COURT OF THE UNITED STATES

a

Stanpargp Ow Company (New JERSEY),

Petitioner,

No. 607

— > October Term,

SouTHern Paciric Company and James OC. 1038

Davis, Director General of Railroads,

Respondents.

J

BRIEF FOR RESPONDENTS IN OPPOSITION TO

MOTION FOR LEAVE TO TAKE NEW EVI-

DENCE

This application is for an order (a) giving the peti-

tioner leave to take additional evidence in this Court;

(b) appointing a commissioner to take such evidence

orally (Motion Papers, p. 2).

I. THE MOVING PAPERS ARE DEFECTIVE IN THAT THEY

PAIL TO STATE (1) PRECISELY WHAT THE PETITIONER

WISHES TO PROVE; (2) THE NAMES OF THE WITNESSES TO

BE EXAMINED.

The petition for certiorari, which is quoted at length

in the moving affidavit, alleges that

“it has come to the attention of counsel in this case,

through proper and reliable sources, that a final settle-

ment has been arrived at between the Railroad Admin-

istration and the Southern Pacific Company by which

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—— —

the liability of the Railroad Administration for the loss

of the Proteus had been finally satisfied and extinguished

by a payment, credit or adjustment on the basis of the

value found by the Commissioner and confirmed by the

District Court, namely, $750,000” (Motion Papers, p. 8).

Yet the affiant states that “the petitioner is not in a

position to draw up written interrogatories dealing with

the matters mentioned in the above quotation from the

certiorari, which it wishes to bring out as an addition to

the record herein” (Article VII, Motion Papers, p. 11).

And further—

“The petitioner does not know, and this deponent as

its counsel has been unable to find out with definiteness,

just what procedure was followed in connection with the

settlement * * * in respect of the value of the steam-

ship Proteus. Until the evidence has been somewhat

developed, counsel for the petitioner cannot even be

certain just what witnesses will have to be examined.

It will of course be necessary to examine the Director

General of Railroads and some of his employees, but who

those employees are counsel does not know. It will prob-

ably be necessary also to examine officers or employees of

the Southern Pacific Company at New York, whose iden-

tity is not known to the petitioner or this deponent, and

which can be discovered only by means of the procedure

that would become available before a Commissioner ap-

pointed by this Court” (pp. 11-2 of the Moving Papers).

The inconsistency of these statements is striking. If

the petitioner’s counsel has learned “through proper and

reliable sources” facts which he wishes to prove, he should

be able to name his witnesses now.

If, however, the petitioner did not have material infor-

mation through “proper and reliable sources” and his

petition for certiorari was merely to prepare the way for

a roving commission or fishing expedition, it would seem

that the writ should be dismissed now. Furness Withy &

Co. Ltd. v. Yantsze Insurance Association, 242 U. 8. 480;

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Southern Power Co. v. North Carolina Public Service Co.,

263 U.S. 508.

There is nothing in the circumstances of this case to

justify the petitioner in disregarding the rules and prac-

tice of this Court. Subdivision 2 of Rule XII of the

General Rules points out specifically the method in which

new evidence on an appeal in admiralty must be taken.

It provides that such evidence shall be taken upon inter-

rogatories to be filed by the applicant with notice to the

opposite party, “accompanied with a copy of the inter-

rogatories so filed, to file cross interrogatories within

twenty days from the service of such notice”.

This rule was adopted in 1817 (2 Wheat. vii), and

from that time to this, so far as we can ascertain, no

testimony has been taken in this Court in admiralty

appeals either viva voce or by open commission.

Even in a case of original jurisdiction (State of New

Mewico vy. State of Teras—April 14, 1924) this Court,

in granting a motion to take additional testimony of a

witness named, required the testimony “to be limited to

the subject matter detailed in his affidavits”,

II, THE TESTIMONY SUUGHT TO BB OBTAINED IS WHOLLY

IMMATERIAL,

The petitioner seeks to take testimony to prove a set-

tlement between the Southern Pacifie Company and the

Director General of Railroads in order that it may in-

voke the rule that a settlement by a third party with one

of two joint tort feasors releases the other joint tort

feasor. But the rule which the petitioner would invoke

has no application to this case.

As pointed out on pages 3 and 4 of the moving affi-

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4

davit herein, the transportation system of the Southern

Pacific Company, including the steamship Proteus, was

taken into the possession and control of the Director Gen-

eral, pursuant to the Act of Congress of August 26, 1916,

and the Proclamation of the President of December 26,

1917. The Southern Pacific Company thereupon became

entitled to just compensation for the property so taken

by the United States by eminent domain. By the Federal

Control Act of March 21, 1918, certain principles were

laid down with regard to the method of arriving at just

compensation, and by the President's Proclamation of

March 29, 1918, the Director General was authorized to

enter into agreements with carriers as to such just com-

pensation. Such an agreement was entered into between

the Director General and the Southern Pacific Company.*

By the “Transportation Act, 1920", Section 202, the

President was directed “as soon as practicable after the ter-

mination of Federal control” to “adjust, settle, liquidate,

and wind up all matters, including compensation, and all

questions and disputes of whatsoever nature, arising out

of and incident to Federal control”. The petitioner’s posi-

tion is that a settlement pursuant to that statute between

the Southern Pacific Company and the Director General,

acting for the President, operates to relieve the petitioner

from all liability whatsoever for its negligence in sinking

the Proteus.

From the time the Director General assumed control

the Government held the property, not as a demise char-

terer, as the petitioner suggests (p. 4), but by eminent do-

main, as is shown by Du Pont De Nemours & Co. V. Davis,

decided by this Court April 7, 1924, and North Carolina

* The agreement was offered in evidence by petitioner’s counsel

and is marked “Petitioner's Ex. 1, 2/3/21, G. J. Z.” (Record, Vol. 2,

p. 681). As it was omitted from the record, we annex to this brief

an abstract of it, marked “A”.

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R. R. v. Lee, 260 U. 8. 16. In the latter case this Court

said:

“The Government operated this railroad not as lessee,

but under a right in the nature of eminent domain.”

And this relation was not changed by the fact that an

agreement was reached as to the method of arriving at

just compensation.

The right of the Southern Pacific Company to just

compensation, as fixed by contract, was its only right

against the Director General in respect of its property

taken over by him. The Director General assumed com-

plete possession and control and owed the Southern Pa-

cifie Company no duty as to the manner of use of the

property. His only obligation was to make proper com-

pensation.

It is well settled that where property is taken by

eminent domain, with due formalities, the owner of the

property cannot sue the taker in tort, but is limited to

his remedy for compensation.

With respect to the Southern Pacific Company the

Director General committed no tort, no matter how negli-

gently his employees may have operated the Proteus, and,

therefore, the Director General was not a tort feasor at

all with respect to the Southern Pacific Company.

Even if it be assumed that one who has taken prop-

erty by eminent domain may still owe a duty to the owner

as to the manner of use of that property, the Director

General could not be sued in tort, for he was but an

arm of the United States, and the immunity of the sov-

ereign was waived only to the extent of “liabilities ordi-

narily incident to the operation of carriers”, Missouri

Pacific R. R. Co, v. Ault, 256 U. S. 554, 559. It was only

as to third parties dealing with the Director General as

a common carrier that the bar of the sovereign’s im-

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munity was let down. As to all others, ineluding the

Southern Pacific Company, it remained.

Any settlement to bring into operation the rule the

petitioner invokes must be of an obligation that is neces-

sarily tort. It is not enough that the obligation might

be tort.

Even if the Director General were liable in tort to

the Southern Pacific Company that company cou!’ disre-

gard the tort and rely upon its right to just coipensa-

tion for the loss of the Proteus. Any tort claim that the

Southern Pacific Company might have had against the

Director General was clearly waived or turned into a

contract liability when on February 19, 1919, after the

loss of the Proteus on August 19, 1918, it made its con-

tract with the Director General. By that contract he

agreed to make good the loss of the property destroyed

by “marine casualties” defined as “casualties covered by

the usual marine insurance policy including collision

clause”, and the Southern Pacific Company accepted the

“obligations of the Director General in this agreement

* * * jn full adjustment, settlement, satisfaction, and

discharge” of all claims for compensation and “for the

use, control, and operation” of the property during Fed-

eral control (Appendix A, Sect. 5).

In any event the petitioner and the Director General

were not joint tort feasors. It is true that the negligence

of the Director General contributed with that of the

Standard Oil Company to the collision, but it does not

follow that the parties were joint tort feasors. Persons

are not joint tort feasors merely because their acts have

contributed to a single damage. There must be some

unity of interest, common design, purpose or concert of

action—“they must in fact or in law have committed the

same wrongful act” (Salmond’s Law of Torts, p. 70).

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The most recent decision on this point dealing with

collisions is that by the English Court of Appeal in the

Koursk, decided February 22, 1924, reported in 40 Times

Law Reports, 399.

Lord Justice Bankes said:

“It is no doubt quite common to speak of each of two

separate tortfeasors as joint tortfeasors in the sense that

where each has contributed to the injury complained of

each is liable for the whole of the damage done. In my

opinion, the use of the expression in such circumstances

is inaccurate and misleading.”

Lord Justice Scrutton stated the negligence briefly as

follows:

“The negligence of the Koursk consisted in deviating

from her convoy course into the track of the Clan Chis-

holm. The negligence of the Clan Chisholm consisted in

not reversing her engines when she saw the Koursk out

of her course.”

He then said:

“The two negligences were separate and independent,

not taken in concert, or as part of a common plan, and

both, in the view of the House of Lords, contributed to

the collision.”

His conclusion was:

“In my view the Koursk and the Clan Chisholm were

not joint tortfeasors of the same tort, but separate tort-

feasors of two different torts.”

As to the definition of joint tortfeasors he said:

“I am of opinion that the definition in Clerk and

Lindsell on Torts (7th edn., at p. 59) is much nearer the

correct view: ‘Persons are said to be joint tortfeasors

when their respective shares in the commission of the

tort are done in furtherance of a common design.”

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This was apparently the view of Judge Addison Brown

in the Hudson, 15 Fed. 162, where he refers to the fact

that in collision cases

“the acts of the two vessels for which they are held liable

are not joint, but wholly separate and independent of

each other; each vessel being held liable solely on account

of its own act of negligence” (p. 168).

Here the Proteus was held in fault for hard-aporting

her helm; for not signalling her extreme helm movement,

and for persisting at full speed ahead (Opinion, Vol. 2,

fol. 2755): the Cushing for not flashing on her lights,

and for failing to give the Proteus a wider berth (Opin-

ion, Vol. 2, fol. 2759). These were entirely separate and

independent acts of negligence, without common design,

or the opportunity for common design.

The rule the petitioner invokes applies only where

a settlement is made by a third party, not in privity with

either of the wrongdoers. The Southern Pacific Company

was not a third party. Between it and the Director Gen-

eral there was a certain privity. There was the relation

that exists between the owner and the taker of property

by eminent domain. There was privity of contract, and

both parties are the joint owners of a judgment against

the petitioner. The rule invoked does not apply where

there is privity between the parties to the settlement.

In case of collision due to mutual fault the cargo owner

is ordinarily barred from recovering from the carrying

vessel by the exceptions of the bill of lading. Could it

be contended that the cargo owner by accepting a bill of

lading releasing the carrying vessel from liability for

errors in navigation thereby releases the other colliding

vessel? Such is the logical result of the petitioner’s

argument.

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Pay ear eens

The Proteus was a total loss. Her underwriters could

have brought suit in their own names, Liverpool and

Great Western Steam Company y. Phenia Insurance

Company, 129 U.S. 397. Furthermore, the recovery here

includes not only the loss of the hull of the Proteus, but

also claims of passengers, crew and cargo (Final decree,

Record, Vol. 2, pp. 888-896).

It is, therefore, obvious that the true alignment of

the parties is not as the petitioner suggests, namely, that

the Southern Pacific Company has a claim against two

joint tort feasors, the Standard Oil Company and the

Director General, but rather that the Director General

and the Southern Pacific Company together had a claim

against the Standard Oil Company which they held as

trustees for hull underwriters, cargo owners, members

of the crew, etc. These beneficiaries should not be preju-

diced by any transactions between the Southern Pacific

Company and the Director General. The Beaconsfield,

158 U. 8. 303.

The petitioner alleges that the settlement was made

between the time of the decision of the District Court and |

that of the Circuit Court of Appeals (Motion papers,

p. 8). We know of no authority holding that if the third

party settles with one of two joint tort feasors after trial

and judgment, such settlement may be made a basis for

opening up the judgment and claiming that such settle-

ment, subsequent to trial, releases the other party.

Whatever claim the Southern Pacific Company had

against the petitioner was merged in the judgment. If

the Southern Pacific's claim against the Director Gen-

eral was in tort, as petitioner asserts, the settlement of

such tort claim would not operate to release a judgment

which the Southern Pacific Company has against another

person.

10

The petitioner's argument carries it no further, in any

event, than that the Southern Pacific Company could not

recover from the petitioner. It does not follow from

the “joint tort feasor” rule, if applicable, that the Director

General is precluded from recovering from the petitioner.

The petitioner also urges as a ground for leave to take

additional testimony that the Southern Pacific Company

should not be allowed to claim from the petitioner “more

than it has agreed with its demise charterer, the Railroad

Administration, as the value of the Proteus, and the basis

of its damages for the loss of the Proteus through that

charterer’s fault” (p. 9).*

This argument apparently proceeds upon the assump-

tion that the judgment against the petitioner is merely

one by the Director General for indemnity, and that,

therefore, he should not recover from the petitioner more

than he has paid the Southern Pacific Company.

But the judgment here is not one in favor of the

Director General for indemnity but is upon the claim

of the Southern Pacifie Company and the Director Gen-

eral, owner and special owner of the property, respec-

tively. Together they represent the full ownership and

interest in the property and are entitled to claim the

full value of the property from the third party, the peti-

tioner, irrespective of the contractual or other relations

between themselves.

As was said by Wallace, J., in the Jersey City, 51

Fed. 527:

“Hither the bailee or the bailor may maintain an action

against a tort-feasor who injures the property while in

the custody of the bailee, and recover the full damages;

* * * Tf, say the court, in White v. Cobb, ‘the suit is

a Whether the petitioner was at fault or not is immaterial. The

Director General’s obligation to make good in case of loss through

collision was absolute as already pointed out.

APIS OT IN ee ee Oy ae aS tes

11

brought by a bailee or special property man against the

general owner, then the plaintiff can recover the value

of his special property; but if the writ is against a

stranger, then he recovers the value of the property and

interest according to the general rule, and holds the bal-

ance beyond his own interest in trust for the general

owner.”

And as pointed out in 2 Bevan on Negligence, 737:

“The bailee, although not liable to the owner, may

sue a third party, who has either injured or converted

the property, and recover its full value or the full amount

of the damage sustained.”

This rule has been frequently applied in mail cases, where

the United States has been allowed to recover the full

value of the property even though it was under no obli-

gation to make good to the sender. National Surety Co.

v. U. 8.,129 Fed. 70; U. S. v. American Surety Co., 161

Fed. 149.

In U. S. Fidelity & Guaranty Co. v. U. 8., 229 Fed.

397, and in U.S. v. U. 8S. Fidelity & Guaranty Company,

247 Fed. 16, the United States was allowed to recover the

full value of the registered package, although its liability

was for only $50.00 per package.

Could it be contended that because a shipper had

taken a bill of lading with an agreed value clause (say

$100 per package) he would thereby be precluded from

recovering from a vessel colliding with the carrying vessel

more than $100 per package. Obviously, the other col-

liding vessel could not avail itself of the agreement as

to value between the shipper and the carrying vessel.

Nor could the other vessel take advantage of the agreed

value, even though the shipper settled with the carrier

on the basis of the agreed value.

That situation is not unlike the one presented here.

Inasmuch as the evidence which the petitioner hopes

to secure would be immaterial on the appeal the motion

prayed for should be denied.

MNES AAR PEE EG CLES BEART RS: OOS ORI: SIS BID tae ti ani ae ee Maly

Ridin Ate

12

Ill. THE PETITIONER HAS FAILED TO MAKE OUT A CASE

FOR THE EXTRAORDINARY RELIEF PRAYED FOR.

The petitioner knew the relations of the Director

General and the Southern Pacific Company from July 21,

1919, when they filed their petition for limitation of liabil-

ity (Record, Vol. 1, p. 33). The petitioner knew, or is

chargeable with knowledge since 1920, that under Section

202 of the Transportation Act, 1920, the President was di-

rected “as soon as practicable” to

“settle” ete. “all matters and * * * disputes * ee

arising out of or incident to Federal control.”

Federal control terminated March 1, 1920. The matter

of settlement had been brought to the petitioner’s atten-

tion on or before December 7, 1920, for at the hearing

before the Commissioner on that day the petitioner's

counsel asked

“whether or not there has been any settlement as between

the Government and the owners of the loss of the Proteus”

(Record, Vol. 2, fols. 1582, 1630).

The petitioner was further put on notice by Mack,

C. J., in his opinion confirming the Commissioner's report.

Referring to the relations of the Southern Pacific Com-

pany and the Director General, he said :

“The claimant and the Director-General, I assume,

have come or will come to an agreement regarding their

respective rights as to the interest accruing during the

period of requisition” (Record, Vol. 2, fol. 2584).

On February 3, 1921, when the petitioner offered in

evidence its Exhibit 1 of that date, the agreement between

the Director General and the Southern Pacific Company,

the petitioner knew that the Southern Pacific Company

had accepted “the covenants and obligations of the Di-

13

rector General in this agreement * * * in full ad-

justment, settlement, satisfaction, and discharge of «ny

and all claims and rights * * * otherwise than

under this agreement, against the United States, the Presi-

dent, the Director General, or any agent or agency thereof,

for compensation * * * and for the use, control and

operation” of the property during Federal control.”

No reason has been suggested why petitioner could

not have obtained the same information before as after

the appeal was argued in the Circuit Court of Appeals.

In Toledo Scale Co. v. Computing Scale Co., 261 U. 8.

399, this Court held that the Cireuit Court of Appeals

had properly refused to allow the case to be re-opened for

the purpose of taking newly discovered evidence where

there was lack of diligence on the part of the applicant.

This Court referred to the

“most salutary rule of law which after parties have had

a full and fair opportunity to prepare their case, refuses

to permit them to drag out litigation by bringing in new

evidence which with due diligence they ought to have

discovered before the hearing. The apparent hardship

of particular cases should not and can not weigh against

the application of this sound principle” (p. 425).

IV. THE MOTION SHOULD BE DENIED AND THE WRIT

DISMISSED.

Dated, April 25, 1924.

CHARLES C. BURLINGHAM

Ray Roop ALLEN

A. Howarp NEELY

Counsel for Respondents

14

A

ABSTRACT OF AGREEMENT BETWEEN THE DiRecTor

GENERAL OF RAILROADS AND THE SOUTHERN Paciric Com-

PANY A) OTHER CORPORATIONS.

The agreement, “made” February 19, 1919, is “be-

tween Walker D. Hines, Director General of Railroads,

* * * arting on behalf of the United States and the

President under the powers conferred by the proclama-

tions of the President,” and the Southern Pacific Com-

uy and ten other affiliated companies.

PREAMBLE AND RBCITALS

The agreement recites:

(a) The President’s proclamation of December 26,

1917, and the taking over of the railroads and systems

of transportation of the companies;

(b) The Federal Control Act of March 21, 1918, au-

thorizing the President to enter into agreements with the

companies ;

(c) The President’s proclamation of March 29, 1918,

authorizing the Director General to agree with the car-

riers on the compensation to be paid for the use of their

properties ;

(d) The President’s proclamation of January 10,

1919, authorizing Director General Hines to make agree-

nents in connection with Federal control;

(e) and (f) The certification to the President by the

Interstate Commerce Commission of the average annual

operating income of the companies, computed as provided

in Section 1 of the Federal Control Act;

15

(g) The fact that the companies operated a line of

steamships between New York and Gulf ports, and that

certain steamers named had been requisitioned by the

Government before Federal control, and it was therefore

doubtful whether they were taken over under the Presi-

dent’s proclamation of December 26, 1917.

SecTION 1.—Privitry, ALTERATIONS, DEFINITIONS, ETC.

SecTION 2.—Prorerty TAKEN Over

Under this section the steamship Proteus was de-

scribed as one of the passenger and freight steamers

taken over.

SECTION 3.—ACCEPTANCE

“(@) The companies accept all the terms and condi-

tions of the Federal control act and any regulation or

order made by or through the President under authority

of said Act * * *; and they further expressly ac-

cept the covenants and obligations of the Director Gen-

eral in this agreement set out and the rights arising

thereunder in full adjustment, settlement, satisfaction,

and discharge of any and all claims and rights, at law

or in equity, which they or any of them now have or

hereafter can have, otherwise than under this agreement,

against the United States, the President, the Director

General, or any agent or agency thereof, for compensa-

tion under the Constitution and laws of the United States

for the taking possession of their property, and for the

use, control, and operation thereof during Federal con-

trol, and for any and all loss and damage to their busi-

ness or traffic by reason of the diversion thereof or other-

wise which has been or may be caused by said taking or

by said possession, use, control, and operation.”

16

SECTION 4.—OPERATION AND ACCOUNTING DURING

FEDERAL CONTROL

SECTION 5.—UPKEEP

This section provides that the Director General shall

expend and charge to operating expenses such sums for

maintenance, repair, etc., of the property “as may be

requisite in order that such property may be returned to

the Companies at the end of Federal control in substan-

tially as good repair and in substantially as complete

equipment as it was on January 1, 1918.”

“If, during Federal control, any of the property

described in paragraph (a) of Section 2 hereof” (which

includes the Proteus) “or any replacement thereof or

addition thereto or betterment or extension thereof is

destroyed or damaged by fire or marine casualty * * *

he shall reimburse the Companies the value of the prop-

erty destroyed or the amount.of the damage at the time

of the loss * * *.”

“The words ‘marine casualty’ are used herein as apply-

ing to floating equipment and as meaning casualties cov-

ered by the usual marine insurance policy including col-

lision clause * * *.”

SECTION 6.—TAXES

SECTION 7.—COMPENSATION

This provides for the annual compensation guaran-

teed to the Companies under Section 1 of the Federal

Control Act, namely, $47,959,898.08, and pro rata for

each fractional part of a year of Federal control, subject,

however, to any increase or decrease in the standard re-

turn hereafter made by the Commission,” as provided in

the preamble, and for payment thereof quarterly

——

17

SECTION 8.—CLAIMS FOR LOSSES ON ADDITIONS, Etc.

This section provides for additions, betterments, ete.,

during Federal control and for the settlement of any

claims by the companies for loss accruing by reason of

expenditures for such additions and betterments.

SECTION 9.—FINAL ACCOUNTING

“(a) At the end of Federal control all the property

described in paragraph (a) of section 2 hereof shall be

returned to the Companies, together with all repairs, re-

newals, additions, betterments, replacements, and road

extensions thereto which have been made during Federal

control, except as any part thereof may have been de-

stroyed or retired and not replaced, in which case the

provisions of section 5 hereof shall naa. 7° oO

SECTION 10.—AGREEMENT Nor To AFFECT RIGHTS

INVOLVED IN CERTAIN LITIGATION

This refers to the pending suit of the United States

against the Southern Pacific Company for dissolution of

the control of the Southern Pacific Railway over the

Central Pacific Railroad.