Petition for Writ of Certiorari — Aktieselskabet Cuzco v. the Sucarseco

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me e Court of the United Sates”

~ Oorosze hcasd 1934.

| AKTIESELSKABET sé cuzco” as owner of the

; Norwegian — TOLUMA,

Petitioner,

- Steamship SU CARSECO, her engines, boilers, ete.,

: A ctacaer EK BOAT CORPORATION,

Respondent,

_ (and two other cases)

WEST INDIA OIL COMPANY and J. H. SENIOR, Agent,

: AMERICAN: bys taraecunen COMPANY, et al.,

Respondents.

_ Counsel for Petitioner.

INDEX.

PAGE

List or AUTHORITIES iii

PETITION .... aul pacele eee 1

JURISDICTION 1

I. StareMentT oF Matter INVOLVED 2

(a) The Facts . = were esDe 2

(b) The Suits ina Ree Net ALA Cas oe vs 4

(d) Opinions Below > i)

(e) Effect of decision......... loca teuelasmeonsee 7

II]. Reasons ror ALLOWANCE oF Writ Seton 7

III. THe Sore Question PRESENTED...................---. 9

Baier 1x Support OF PETITION..................-.-2-ccceeeseceeeseeeee: 12

First Point: The petitioner [Zoluma] was

legally obligated to make repairs at the port of

refuge and deliver the cargo, or respond to dam-

ages to cargo; and the petitioner has the primary

right of recovery trom the tort feasor, Sucarseco,

for these expenses, directly resulting from collision 12

Seconp Potnt: Cargo owners were not obli-

gated to contribute toward Toluma’s port ot

refuge expenses under the maritime law of Gen-

eral Average. Their obligation to Toluma arose

only because of the terms of their contract with

Toluma, %. €., the Jason Clause............<-cccovscseseseoee 14

ot iy Dee

Tuirp Point: The liability to contribute to

Toluma’s expenses which Cargo owners assumed

by agreeing to the Jason Clause does not confer

upon Cargo owners any right of recovery from

owner of Sucarseco, which was a stranger to the

COURFRCES ......------00+ gatas Senor

Fourtu Pornt: Sueh rights as Cargo owners

may have here to recovery of General Average

contributions are secondary to Toluma’s right of

recovery from Sucarseco, and derivative only.

Last Point: The petition for writ of certiorari

should be granted. ............--..:000---<0ss¢-+:

APPENDIX ....... bre era eae

PAGE

ill

List oF AUTHORITIES.

PAGE

Angle v. Chicago, St. Paul, Minneapolis & Omaha

Ry. Co., 11 U.S, 1 1s

Anglo-Algertan S.S. Co, Ltd. vs. The Hloulder Line,

Ltd. (1908), 1 IK. B. 659 18

Anthony v. Slaid, 52 Mass. 290 17

Baltimore, The, 8 Wall. [75 UL S.] 877, p. 385 13

Brink vo. Wabash R. BR. Co., 160 Mo. 87 17

Byrd vy. English, WT Ga. 192 18

Cattle vo Stockton Waterworks Co, (i875) L. R., 10

Q. B. 453... 18

Cole’s General Average Law and Rules” 9

Connecticut Insurance Cov. New York RoR. Co., 25

Conn. 260 17

Conqueror, The, 166 U.S. 110, p. 125 13

Dale v. Grail, 34 N. J. 1. 142 17

Karly. Lubbock [1905], 1K. B. 255 18

Elliott Steam Tug Co., Ltd. vs. The Shipping Con-

troller (Court of Appeal) [1922], 1 K. B. 127, 189,

|. > Mees, & . 17,18

Knergia, The, 56 Fed. 124; 66 Fed. 604... icc cee aes

Krie & Western Traus. Co. v. Chicago, 78 Fed. 42 y.5

Federal No, 2, The (C. C. A, 2), 21 Fed. (2d) 513....17, 18, 19

Gray's Harbor Tughboat Co. vy. Petersen, 250° Fed.

996

Tusurauce Co, vs. Brame, 95 U.S. T54..

dé

’

6,17

Irrawaddy, The, 171 U.S. 187.5, 8, 9, 13, 14, 15, 16, 22, 23, 24

dieoe, The, Geet). B: Be oe. ccasnaceooneity te & 14,13, 96

Lady Pike, The, 21 Wall. [88 UOS.| TL, pp. 14-15

Lirerpool Steam Cov, Phenir ns. Co, P90 OS. 897,

pp. 440 7

Lowndes” General Average, Oth Madition, p. 37

Magare Hammond, The, 4 Wall, [76 U.S.) 455, pp. 458

Margaret J. Sanford, The (CL, S. Dn. NL YO), 87

ed, 148. po. Toe

Measure of The Damaacs ino Maritime Collisions,

The, drd ld, by KS. Roseoe, pp. 2022

Milton vs. Storuw, Wd Vermont 10]

Minnetonka, The | WO], Prob. Dive 206

Magara, The v. Cordes, 21 low. [62 UL 8S.) 7, pp.

28-29

North Star, The, W6U. 8S. 17, pp. 22, 28-29

Phoenw Ins, Coov. Brie Transp. Co. WT USS. 38h

sal

Pool Shippina Co, Ltd. vs. Vnited States, 33° hed,

(Sa) Zio

Ralliv. Societa Anonima, 222 Fed. 094 5. 30, 34

Ralli ve Troop, lat U.S. 8s6 6,8

Remorquaae vs. Bennetts (1, 1 IK. BL 248 Is

Robins vs. Flint, 275 UL S. 308 6,9,17,18

Rockingham Mutual Fire Ins. Co. vs. Bosher, 39 Me.

a .

er, ¢>

Steel Inventor, The (D. C.), 86 Fed. (2d) 399, p. 401

Williamson vs. Barrett, 13 How. [54 U.S.) 101, p. 110

*?)

Supreme Court of the United States

No. Ocropen Tenm, 1954.

AKTIESELSKABET ‘Cuzco’, as owner of

the Norwegian Steamship ‘* To/mma’’,

Petitioner,

Steamship ‘Sucarseco™, her engines,

boilers, ete, Scupmanine Boar Corpo-

KATION,

Respondent,

(and two other CUSCS )

West [Nota On. Company and J. Hi.

Senton, Agent, American [Nsurance

Company, ef al.,

Respondents.

PETITION FOR WRIT OF CERTIORARL TO THE

CIRCUIT COURT OF APPEALS FOR THE

SECOND CIRCUIT,

JURISDICTION,

The decree below was entered August 14, 1934. BR. 88.

Jurisdiction of the Court is provided by (347(a) of Title

28 of the United States Code.

To the Honorable Chief Justice and the Associate Justices

of the Supreme Court of the United States:

The petitioner, Aktieselskabet Cuzco, owner of the Nor-

wegian Steamship JToluma, prays that a Writ of Cer-

tiorari issue herein to review a decree of the Circuit

Court of Appeals for the Second Circuit, entered on August

14, 1954, R. 88, modifving a tinal decree of the United

States District Court for the Southern Distriet of New

York entered on February 25, 1954, R. 65-70, adjusting

damages among two colliding vessels and owners of cargo

on one of the vessels, arising frem a collision between the

Norwegian Steamship Tolwma, and the American Steam-

ship Sucarseco, which occurred at sea, off the Atlantic

Coast, on the night of November 22, 1928; and, the peti-

tioner respectfully shows unto this Court the following:

I; SraTeMENT oF Marrer INvoLven.,

(a) The Facts.

It is agreed that the collision was caused by fault or

errors in navigation of both vessels, and that the resulting

damages were not caused or contributed to by unseaworthi-

ness of the said vessels, nor by lack of due diligence on the

part of the respective owners to make the vessels seaworthy

in all respects, R. 47. It is not sought to review here

any questions of negligent navigation or seaworthiness,

therefore.

The steamship Toluma, which was operating as a com-

mon earrier, and which was laden with a general cargo, put

back into the harbor of Norfolk, Va., to make repairs of

the collision damages, and in order to effect the repairs,

part of the cargo was discharged, and stored; and, after

repairs, the cargo was reloaded, and the 7'o/uma resumed

and completed her voyage and delivery of her cargo to

destinations. R. 50, 59.

There was not any direct physical damage to cargo

resulting from the collision; and all expenses incurred at

the repair port, Norfolk, including discharge, storage, and

reloading cargo, were paid by the petitioner. R. 48, 50.

The contraets of earriage (bills of lading) contained a

condition whereby owners of cargo on the Toluma under-

took to contribute with the shipowners (petitioner) in gen-

eral average ‘to the payment of any sacrifices, losses or

expenses of a general average nature that may be made or

incurred for the common benefit’? as if the damage had not

resulted from negligence of the carrier ( Toluma). R. 52.

That condition of the contract of earriage, known as

“the Jason Clause’’, reads as follows:

“Tn case of danger, damage or disaster result-

ing from aecident or from faults or errors in naviga-

tion or in the management of or from any latent or

other defect of the vessel, her machinery or appur-

fenances, from unseaworthiness, even though exist-

ingat the time of shipment or at the beginning of the

vovage, if the defeet or nnseaworthiness was not

discoverable by the exercise of due diligence and if

the shipowner shall have exercised due diligence to

make the vessel seaworthy and properly manned,

equipped and supplied with respect to the matters

concerned in the aforesaid danger, damage or dis-

aster, then the shippers, consignees or owners of the

cargo or the holders of this bill of lading shall never-

theless pay salvage and any special charges incurred

in respect of the cargo and shall contribute with the

shipowners in general average to the payment of any

sacrifices, losses or expenses of a general average

nature that may be made or incurred for the eommon

benefit or to relieve the adventure of any common

peril, all with the same foree and effect and to the

same extent as if such accident, danger, damage or

disaster had not resulted from or been occasioned

by faults or errors in navigation or in the manage-

ment of the vessél or by any latent or other defect

or unseaworthiness.’’ R. 52.

ee ec

In fulfillment of the terms of that (special) contract, a

general average statement was prepared, and cargo owners

thereafter paid to the petitioner the ratable proportions

shown by the adjustment, for expenses ineurred by the

petitioner at the repair port (principally the discharge of

the cargo to make repairs).

(b) The Suits.

Both vessels having sustained damage, each sued the

other, and the petitioner included among its items of dam-

age the amounts paid by it on account of its port expenses,

including the cost of discharging, storing, and reloading

the cargo.

Cargo owners also sued the steamship Sucarseco and

owners to recover the amounts [in full} which they (cargo

owners) had contributed to the petitioner under the terms

of the special contract between the petitioner, as owner of

the Toluma, and the eargo owners (shippers), @ ¢., ‘‘the

Jason Clause,"* supra.

(ce) Decisions Below.

1. The District Court allowed recovery by the petitioner

[Toluma] from the Sucarseco of one-half of its damages,

including the repair port expenses; and disallowed direct

recovery by cargo owners from Sucarseco of the coutribu-

tions which eargo owners made to the petitioner by reason

of the terms of the contract of earriage, but awarded to

cargo owners [recovery back] their proportionate part of

one-half of the damages ‘‘of a general average nature’’

contributed by cargo owners, and which the petitioner re-

covered from Sucarseco. R. 59-64. Opinion reported in 4

F. Supp. 344.

2. The Cireuit Court of Appeals for the Second Circuit

modified (reversed) the District Court’s decision, and

awarded cargo owners recovery in full, direct from Sucar-

seco, of contributions [in full] which cargo owners made to

the petitioner [7'oluma] under the special contract, the

Jason Clause; and thereby disallowed the petitioner re-

covery of expenses which it had incurred at the repair port,

and thus reduced petitioner’s recovery of its collision dam-

ages by one-half of the port expenses. R. 81. Opinion re-

ported in 1934 A. M. C. 1083.

(d) Opinions Below.

1. The District Court (by Judge Roperr P. Patrrerson )

held, that there is not any obligation on cargo owners to

contribute in general average to the losses (expenses) of

the carrier, when the losses result from the carrier’s negli-

gence, under the decision of this Court in the case of The

Irrawaddy, 171 U.S. 187; that, whereas the obligation may

arise by operation of an express agreement between the

carrier and cargo owner to share such expenses (‘‘make

contribution’’), under the decision of this Court in the case

of The Jason, 225 U.S. 32, that is a secondary liability only

and does not entitle the cargo owner to a direct right of

action against the other vessel, Sucarseco (non-carrier) ;

but that the cargo owner may have an accounting from the

carricr for a proportionate part of the carrier’s recovery

from the other vessel, Sucarseco, under the decision of the

same Court in the case of Ralli v. Societa Anonima, 222

Fed. 994.

Moreover, the District Court found that cargo’s contri-

butions were voluntarily made, that is, because of the agree-

ment with the carrier, Toluma, i. e., the Jason Clause, and

were too remote, as to Sucarseco, to be recoverable from

. AAG ttre

Sucarseco, under the decisions of this Court in the cases of

Robins vs. Flint, 275 U.S. 303, and Insurance Co. v. Brame,

95 U. S. 754.

2. The Cireuit Court of Appeals of the Second Cir-

euit (by Judges Manton, Swan and Cuase) held in effect,

that the expenses at the repair port were incurred by the

master of the Toluma as agent for all concerned [2. e., for

cargo, as to its proportion], under the decision of this Court

in the ease of Ralli vs. Troop, 157 U. S. 386; that the ship

owner [Toluma] was not obligated to make any sacrifices

[ineur expenses?] ‘‘to save cargo,’’ under the decision of

The Jason, 225 U. S. 32; that the expenses incurred [2. e.,

+9?

cargo’s proportion] were ‘‘sacrifices’’? made by cargo own-

ers ‘‘to make it possible to complete the voyage and avert

greater loss’’; R. 84-5; that the condition of the contract

of carriage, i. e., the Jason Clause, is not a ‘‘diminution

of the rights cargo would otherwise have,’’ and by agree-

ing to contribute in general average in accordance with the

provisions of the Jason Clause, cargo ‘‘secured”’ the right

to have the shipmaster act as its agent ‘‘to make such sae-

rifices as may be timely and effective to avoid greater loss”’;

R. 86; that ‘‘the creation of the emergency’’ [collision |

causes loss to cargo, with or without the Jason Clause,

R. 87; and that the terms of the contract of carriage do

not concern the tort feasor (Sucarseco); and that cargo

may recover (in full) from the tort feasor Sucarseco

(stranger to the contract) despite the principles laid down

in the decisions of this Court in the cases of Robins v. Flint,

975 U. S. 303, and Insurance Company vs. Brame, 95 U.S.

754, ‘provided the legal relationship of cargo and carrier

coupled with the occurrence of events for which the tort

feasor is legally responsible creates a general average situ-

ation that requires cargo to contribute’’, (italies ours).

R. 87.

(e) Effect of decision,

Whereas, under the ruling of the District Court, the

petitioner would have recovered as collision damage one-

half of all its port expenses from the joint tort feasor

Sucarseco, and would then account to cargo (refund) the

latter’s proportionate part of the recovery; vet, under the

ruling of the Cireuit Court of Appeals the petitioner can-

not recover that part of the port expenses which cargo

owners agreed [voluntarily] to contribute, and which peti-

tioner paid; and, cargo owners are awarded their contribu-

tions in full (direet from Sucarseco), which in turn offsets

the full amount against the petitioner's recovery, with the

net result that petitioner loses one-half of the port expenses

which cargo agreed to contribute, amounting to nearly

twenty thousand dollars here. R. 65-70.

In other words, although cargo owners were not obli-

gated to pay anything to the petitioner by way of gencral

average contributions, heeause of negligence of the peti-

tioner’s servants, but for the special contract between

cargo owners and petitioner, cargo owners are now allowed

to recover from the tort feasor, Sucarseco, as a direct col-

lision damage, the full amount of their contributions vol-

untarily made to the petitioner.

The contract of carriage (i. e., Jason Clause) is thus

nullified.

Il. Reasons ror ALLOWANCE OF Writ.

The petitioner seeks a review of the decision on the

following grounds:

1. The matters involved are of great importance to

commercial maritime interests, involving the relationships

of general carriers of cargo, shippers and owners of cargo,

and marine insurance underwriters, both domestic and for-

eign. It may be said that relationships of these interests in

every voyage of every general carrier of cargo to and from

the United States are materially affected by this decision.

2. The subject of the law of General Average has hereto-

fore received consideration by this Court in such outstand-

ing cases as Ralli v. Troop, 157 U. S. 386 [decided April 1,

1895], The Irrawaddy, 171 U.S. 187 [decided May 31, 1898],

and The Jason, 225 U. S. 32 [decided May 13, 1912].

While these decisions have settled the American law on the

questions raised therein, there have arisen, in subsequent

maritime commercial activities, controversial questions

growing out of the practical application of the principles of

law announced therein, particularly under the last cited

ease, which should receive the further consideration of this

Court, as would be required in a review of the present

decision.

3. This Court has not decided questions in the law of

(jeneral Average raised herein, and because of the previous

rulings of this Court in the cases cited under 2 above, and

the progression and expansion of the principles therein

promulgated to the present situation, it becomes necessary

that this Court pass upon the decision herein, in order to

settle disputable practices which have arisen.

4. The decision here seems so manifestly untenable,

under all principles of law heretofore announced and ap-

plied by this Court, that it calls for the exercise of this

Court’s review.

5. The decision is in direct conflict with the controlling

principle of the law of General Average as laid down in the

‘ase Of The Irrawaddy, 171 U. S. 187. If the master was

acting solely as the agent of the cargo, insofar as cargo’s

interests were concerned, as found by the Circuit Court of

Appeals here, the shipowner in the case cited would have

been entitled to recover a general average contribution,

whereas this Court held he was not so entitled.

6. The decision is in direct conflict with the controlling

principle of the law of torts, as to recoverable damage, laid

down in the case of Robins vs. Flint, 275 U.S. 303.

7. The decision is in direct conflict with the weight of

authority on the subject involved.

II. Tut Sore Question Presenten.

Whether a cargo owner, suffering no physical damage,

and not liable as a matter of general maritime law for a

general average contribution because the carrying vessel

involved in a collision was negligent [The Irrawaddy,

supra], may nevertheless sue and recover from the non-

carrying vessel, although jointly negligent, a general aver-

age contribution paid to his own vessel solely because of a

special contract between him and his own vessel, to make

such a contribution, to which contract the non-carrying

vessel was not a party.

It will be seen that the question here involved will arise

in every mutual fault collision case where either of the

vessels has cargo on board and is compelled to put into a

port of refuge (a very frequent occurrence). It is obvious

that, outside the Second Circuit, the maritime community

will not be content to accept the decision herein as final,

particularly in view of the intrinsic inconsistencies of the

opinion. Until the Supreme Court decides the issue we

shall have and continue to have dispute and discord in the

settlement of all such collision cases.

A certified copy of the transcript of record of all pro-

ceedings in the District Court and the Circuit Court of

Appeals is presented herewith.

Wuererore, your petitioner respectfully prays that a

writ of certiorari may be issued out of and under the seal

of this Honorable Court, directed to the United States

Cireuit Court of Appeals for the Second Cireuit, demand-

ing the said Court to certify and send to the Supreme Court

for its review and determination on a day certain to be

therein designated, a full and complete transcript of the

record and all proceedings in the said Cireuit Court of

Appeals, in the said ease entitled ‘* Aktieselskabet ‘Cuzco’,

as owner of the Norwegian Steamship 7'vlwma, Petitioner,

against Steamship Sucarseco, her engines, boilers, ete.,

Submarine Boat Corporation, Respondent, West India Oil

Company and .J. H. Senior, Agent, American Insurance

Company, ef al., Respondents’’; and that the said decree

of the Cireuit Court of Appeals in the said case may be

modified by this Honorable Court, and that your petitioner

may have such other and further relief or remedy in the

premises as to this Honorable Court may seem meet and

just, and your petitioner will ever pray, ete.

AKTIFSELSKABET ‘‘Cuzco,”’

By Wuuutam H. McGrann,

Counsel for Petitioner.

November 9, 1934.

StaTE oF New York,

7 , SS.:

County or New York, {

Wituram H. McGrann, being duly sworn, says:

That he is counsel for the petitioner herein and that

the foregoing petition is true to the best of his knowledge,

information and belief.

WituraMm H. McGrann.

Sworn to before me this

9th day of November, 1934.

JAMES A. CARNEY

(SEAL)

I hereby certify that I have examined the foregoing

petition, that in my opinion it is well founded and entitled

to the favorable consideration of the Court and that it is

not filed for the purpose of delay.

Wiuuiam H. McGrann.

Supreme Court of the United States

Ocroper Term, 1984. Now

AKTIESELSKABET ‘*Cuzco”’, as owner of

the Norwegian Steamship **Toluma”’,

Petitioner,

vs.

Steamship ‘*Sucarseco’’, her engines,

boilers, ete., SupManine Boar Corvo-

KATION,

Respondent,

(and two other cases)

Wesr Ino Om Compaxy and J. H.

Sexton, Agent, AMenican [NSURANCE

Company, ef al.,

Respondents.

BRIEF IN SUPPORT OF PETITION FOR WRIT

OF CERTIORARI,

FIRST POINT.

Tre peririonen [Toluma|] Was LEGALLY OBLIGATED TO

MAKE REPAIRS AT THE PORT OF REFUGE AND DELIVER THE CARGO,

OR RESPOND IN DAMAGES TO CANGO; AND THE PETITIONER HAS THE

PRIMARY RIGHT OF RECOVERY FROM THE TORT FEASOR, Sucar-

seco, FOR THESE EXPENSES, DIRECTLY RESULTING FROM COLLI-

SION.

The collision physically damaged the Toluma and inter-

a the Toluma’s voyage to the extent of requiring the

Toluma to proceed to a port of refuge in order to make

repairs of collision damage. As a common carrier of cargo,

Toluma Was substantially an insurer, bound to make safe

delivery at destination, and, consequently, apart from any

considerations of adjusting expenses as between Toluma

and her cargo by way of General Average, Toluma was obli-

vated by law to complete her voyage, or sustain the conse-

quential losses. The Niagara v. Cordes, 21 How. [62 U. S.]

7, pp. 28, 29; The Maggie Hammond, 9 Wall. [76 U. S.]

435, p. 458; The Lady Pike, 21 Wall. [88 U.S.] 1, pp. 14-19;

Liverpool Steam Co. v. Phenix Ins, Co., 129 U. 8. 39%,

pp. 440-1; The Irrawaddy, 171 U.S. 187, pp. 190, 195-6,

Under the principle of ‘‘restitutio in integrum,”’ the

expenses incurred by Toluma constitute an element of the

damage recoverable direct from the tort feasor, Sucarseco,

by Toluma; and, Sucarseco is primarily liable to Toluma

for these expenses. The Baltimore, 8 Wall. [75 U. S.] 377,

p. 385; Williamson vs. Barrett, 13 How. [54 U. S.] 101

(411), p. 110 (416); The Conqueror, 166 U.S. 110, p. 125;

The Margaret J. Sanford (C. C., 8. D. N. Y.), 37 Fed. 148,

cases cited at page 152.

The ruling of the Cirenit Court of Appeals here oper-

ates to deprive the petitioner of its right of action against

Sucarseco for a portion of Toluma’s damage comprised in

the expenses which 7’olwma incurred, and paid, at the port

of refuge.

SECOND POINT.

(ARGO OWNERS WERE NOT OBLIGATED TO CONTRIBUTE TOWARD

Toluma’s vorr oF REFUGE EXPENSES UNDER THE MARITIME

LAW oF Genera Avensce. Trem opnigation ‘to Toluma

\ROSE ONLY BECAUSE OF THE TERMS OF THEIR CONTRACT WITIE

Toluma, t. e., THE Jason CLAUSE.

Sinee the Tolima was bound, as a common earrier, to

complete her voyage, if reasonably possible to do so (as was

the eireumstanee here), and was bound to make the neces-

sary collision repairs at the port of refuge, in order to

fulfill her obligations, cargo owners had the right to rely

on Toluma to perform that duty, or respond in damages to

cargo, cases supra; but, under the fundamental principle of

the law of General Average, which prevents the Carrier

from collecting contributions from Cargo toward expenses

resulting from the negligence of the Carrier, Cargo owners

were relieved of any liability whatever to contribute toward

these expenses, although of a ‘tgeneral average nature.”

That principle of the law of General Average has been deti-

nitely established by this Court, in the ease of The Irra-

waddy, 171 U.S. 187, pp. 189-190, and 196-197,

The situation is then, that Cargo’s only lability to

coutribute towards the expenses necessarily ineurred by

Toluma arose from the contract between the petitioner

(Toluma) and Cargo owners, as expressed in the Jason

Clause. R. 52. While that clause has been held to be

valid by this Court, The Jason, 225 U.S. 32, that is, eh-

forceable by and among the parties to the contract, 11

cannot and does not alter that fundamental principle of

the law of General Average as above stated, The Irra-

waddy, supra.

Appartntly the Circuit Court of Appeals has read into

this Court’s decision in the case of The Jason, 225 U.S. 32,

an intention to overrule or modify its decision in the case

of The Irrawaddy, 171 U.S. 157, and to the extent of en-

grafting into the law of General Average principles which

are clearly unjustifiable.

Thus, it is said by the Court that by agreeing ‘tto con-

tribute in General Average though the Harter Act would

otherwise excuse it from doing so,’ Cargo owners were

thereby enabled to have the master act as Cargo’s agent

to make such sacrifices [incur expenses | as may be timely

and effective to avoid greater loss. R. 86. Obviously,

it did not require that Cargo should give such a considera-

tion as Waiving its rights to withhold contributions where

the carrier is negligent, as the master was already obli

gated to act for Cargo’s interests, if necessary,

The Court further states:

“Since the Jason Clause is valid, it was lawful

for the owners of cargo to ship it at their own risk

so far as that clause made the risk theirs. And

their lability to contribute in general average under

this clause is in no true sense the less a general lia-

bility imposed by maritime law than it was when a

veneral average situation was created as a matter of

law merely by circumstances occurring on a voyage.”’

R. 86.

That statement, so it is submitted, indicates a complete

misconception of this Court’s decisions in both The Irra-

waddy and The Jason, The Cireuit Court of Appeals im-

plies that incorporation of the Jason Clause is coextensive

with ‘ta general liability imposed by maritime law,’’ which,

of course, is not so, certainly not as to parties in the posi-

tion of Sucarseco, t. €., strangers to the contract.

Finally, the Court concludes:

‘*provided the legal relationship of cargo and car-

rier coupled with the occurrence of events for which

the tort feasor is legally responsible creates a gen-

eral average situation that requires cargo to con-

tribute, it may then recover such contributions from

the tort feasor, as in The Energia,* supra.’’ R. 87.

(Italics ours.)

That statement further confirms a conclusion that the

Cireuit Court of Appeals regards the decision in the case

of The Jason as tantamount to overruling the previous

decision of The Irrawaddy; otherwise, it shows that the

Cireuit Court of Appeals regarded the ‘‘legal relationship”’

established purely by the private contract as one which a

tort feasor, stranger to the contract, must know or con-

template at his peril. Posf, p. 18.

It is believed that a reading of the opinion of the Cir-

cuit Court of Appeals will disclose a confusion of a right

under private contract with a right under maritime law,

which is the basie error in the decision. In view of the two

decisions of this Court, however, in the two cases cited, @. e.,

The Irrawaddy and The Jason, it seems plain that the situ-

ation requires clarification, as the decision now stands,

* Referred to on pages 22 and 23, post.

THIRD POINT.

THE LIABILITY TO CONTRIBUTE TO Toluma’s EXPENSES

wHich CARGO OWNERS ASSUMED BY AGREEING TO THE JASON

(‘LAUSE DOES NOT CONFER UPON CARGO OWNERS ANY RIGHT OF

RECOVERY FROM OWNER OF Sucarseco, WHICH WAS A STRANGER

TO THE CONTRACT.

The Jason Clause being no more than a private contract*

limited in effect to the parties among whom it was made,

i. e., Toluma and owners of Cargo on T'oluma; it must fol-

low that Cargo owners are squarely in the position of one

who having sustained a loss solely because of his contract

with another, seeks to recover that loss from a third party,

whose tort would not have caused the loss [to Cargo

owners| except for the terms of his contract, which were

unknown to the tort feasor. The alleged damage is too

remote to be actionable against Sucarseco, as has been well

settled by the authorities. Robins vs. Flint, 275 U.S. 303;

Insurance Co, vs. Brame, 95 U.S. 754; The Federal No. 2

(C. C, A., 2nd Cir.), 21 Fed. (2d) 313; The Steel Inventor

(D. S., 8S. D. N. Y.), 36 Fed. (2d) 399, p. 401; Dale v. Grant,

34. N. J. L. 142; Anthony v. Slaid, 52 Mass. 290; Connectv-

cut Insurance Co. v. New York R. R, Co., 25 Conn, 265;

Milton v. Story, 11 Vermont, 101; Rockingham Mutual Fire

Ins. Co. v. Bosher, 39 Me. 253; Brink v. Wabash Railroad

Co., 160 Mo. 87, and cases cited therein; also, Elliott Steam

Tug Co., Ltd. v. The Shipping Controller (Court of Ap-

* Clause 12 of the Contract (Bill of Lading) incorporates the

special rules of adjustment of General Average known as York-

Antwerp Rules of 1890 and Antwerp Rule of 1903. These are not

in strict accordance with American practice generally. See

Appendix.

peal), [1922], 1 K. B. 127, 139, 142; Remorquage v. Ben-

netts [I911], 1K. B. 248; Anglo-Algerian 8. S. Co., Ltd. v.

The Moulder Line, Ltd, |1908], 1 IK. B. 659; Earl v. Lub-

bock [1905], 1K. B, 258; Simpson vy. Thomson [1877], L. R.,

3 App. Cas. 279; Cattle v. Stockton Waterworks Co. [1875],

L. R.. 10 OO; B, 453.

This Court, by Mr. Justice Houmes, in the case of Robins

v. Flint, supra, stated, at pp. 308-309;

‘But suppose that the respondent’s loss flowed

directly from that souree. Their loss arose only

through their contract with the owners—and while

intentionally to bring about a breach of contraet

may give ric toa cause of action, Angle v. Chicago,

St. Paul, Minneapolis & Omaha Ry. Co., 151 U.S. 1,

no authority need be cited to show that, as a general

rule, at least, a tort to the person or property of one

man does not make the tort feasor liable to another

merely because the injured person was under a con-

tract with that other, unknown to the doer of the

wrong. See Sarings Bank vy. Ward, 100 U.S. 195.

The law does not spread its protection so far. A

good statement, applicable here, will be found in

Elhott Steam Tug Co., Ltd. v. The Shipping Con-

troller [1922], |W. B. 127, 189, 140. Byrd vy. Eng-

lish, WG Ga. 192. The Federal No. 2, 21 ¥F. (2d)

212.”

The ease of The Federal No. 2, supra, which was a de-

cision of the Cireuit Court of Appeals for the Second Cir-

euit, disallowed a claim of a shipowner against another

tortious vessel owner, for expenses incurred for mainte-

nanee and cure of a seaman injured by the latter vessel,

on the ground that the damage arose out of the contractual

relationship between the shipowner and the seaman,

although the expenses incurred directly resulted from the

injury. It is difficult to see how the Court can reconcile

the present decision with its own decision in the ease of

The Federal No, 2. The distinction sought to be made by

the Court was that in the present case the collision with

the tortious Sucarseco, ‘‘was a direet contributing cause

of the loss which was sustained by cargo.’? R. 86. The

answer is that Cargo’s ‘‘loss’’ arose solely by reason of

its contractual relationship to its carrier, Toluma.

The District Judge summed up the situation of Cargo

owners as follows:

‘““Their loss arose only because of their contract

with the carrier. The fact that the Suearseco in-

jured the Toluma does not make it liable to persons

who incurred losses because of contracts with the

owner of the Toluma that were rendered burden-

some because of the injury. In the eye of the law

such damages are too remote.’’ (Citing ‘ases. )

R. 63.

FOURTH POINT.

SucH RIGHTS AS CAarnGo OWNERS MAY HAVE HERE TO RECOV-

ERY OF GENERAL AVERAGE CONTRIBUTIONS ARE SECONDARY TO

Toluma’s ®iGHT OF RECOVERY FROM Sucarseco, AND DERIVATIVE

ONLY.

According to Lowndes’ General Average, 6th Edition,

Introduction, the practice now recognized in maritime law

as the law of General Average arose because of the need of

insuring or indemnifying the several partners to a marine

venture against loss and expenses incurred for the common

benefit. General average is in reality a method of mutual

protective insurance, therefore, and as stated in Cole’s

“General Average Law and Rules’’, it is a method of

ee te ae a

‘‘arriving at the same result which might be reached by the

alternative plan of insuranee’’. Recognizing this analogy,

both the Cireuit Court of Appeals of the Seeond Circuit,

and the District Court of the Southern District of New

York, have applied the principle of subrogation to the col-

lection (refund) of Cargo’s general average contributions.

Pool Shipping Co., Ltd. vs. United States, 33 Fed. (2d) 275;

Ralli vy. Societa Anonima, 222 Fed. 994.

In the case of Pool Shipping Company, the steamship

Clearpool was allowed recovery as part of the collision

damages, of certain items toward which it had compelled

contribution in general average from its cargo. In that

ease, however, the Clearpool was not at fault, and there was

not any question as to the obligation of Cargo to contribute

under the law of General Average. The Court regarded the

tortious colliding vessel as ‘‘primarily liable’? and the

Cargo as ‘‘secondarily liable’’, to the Clearpool; and, that

Cargo was ‘‘entitled to subrogation’’, so that ‘‘the recovery

to the extent of any amount theretofore contributed by

Cargo would be for its aecount’’. P. 277.

Also, in the ease of Ralli vs. Societa Anonima, 222 Fed.

994, the late Cireuit Judge Mayer, then sitting as a Dis-

trict Judge, invoked a similar analogy in determining

Cargo’s ‘‘refund’’ from its own carrier, of portions of col-

lision damage recovered by the carrier from the non-earry-

ing vessel. In that case which also arose from a collision,

the suit was by Cargo on one vessel to recover from that

vessel the proportion of its general average contributions,

which had been recovered in part from the non-carrying

vessel; and, the Court awarded to Cargo only that propor-

tion of Cargo’s contributions for which recovery had been

made from the other (non-carrying) vessel (7. e., one-half of

Cargo’s contributions).

These Courts thus clearly distinguished between the

direct right of the carrier to recover all general average

expenses from the tortious non-carrier, and the derivative

right of Cargo owners making contributions to this carrier

to recover back from the carrier only that proportion of

their contributions which carrier directly recovers from the

non-earrier. That is the logical and equitable application

of the principles of marine insurance to the situation here.

Cargo owners, as insurers pro rata of the expenses of a

general average nature become subrogees, and, ‘“‘in any

form of remedy’’, they can take only so much as the insured

(Toluma) may take. Phoenia Ins. Co. vs. Erie Trauspor-

tation Co, 117 U.S. 312, p. 321.) In the Pool case, supra,

it so happened that they secured a refund in full, because

the non-carrier was solely at fault; but, in the Ralli vs.

Societa case, where both vessels were at fault, as here, they

could take only one-half, which represented the quantum

recovered direetly by their carrier.

If the principle of single liability had been applied to

the Ralli case, instead of adjustment on a basis of ecross-

liability, the recovery (refund) would have been propor-

tionately less. The North Star, 106 U. S. 17, pp. 22, 28-29.

The principle of single liability should apply here.

The analogy of the two decisions above cited to the

present case is that Cargo owners, as insurers of Toluma’s

port of refuge expenses, pro tanto, cannot stand in any bet-

ter position vis-a-vis Sucarseco in respect of the quantum

of recovery than does T'oluma; and, that Cargo’s rights are

subordinate to T'oluma’s rights, and derivative from

Toluma’s rights. That is, Cargo owners must be satisfied

with the rights of a ‘‘subrogee’’ to take back from Toluma

only Cargo’s ratable portion of Toluma’s recovery.

The District Court in the present case applied the insur-

ance analogy and coneluded that Cargo’s ‘‘only basis ‘of

recovery against the other vessel is by subrogation to the

right of the ecarrier,’’ R. 63; and that ‘‘if the cargo owner

has made good to the carrier part of the loss ineurred, the

carrier on later recovery against the other vessel must

account to the cargo owner for a proportionate amount

when the damages have thus been diminished.’’ R. 62.

The Cireuit Court of Appeals, disregarding the con-

trolling principle of the law of General Average as an-

nounced in the ease of The Irrawaddy, supra, ante, p. 14,

and despite the authoritative decisions as to remoteness of

Cargo’s claim here against Sucarseco, ante, p. 17, invoked

its early decision in the ease of The Energia, 66 Fed. 604 to

support its conclusion that Cargo’s general average con-

tributions stood on the same plane as a direct physical dam-

age to cargo inflicted by Sucarseco, and that Cargo owners

could therefore recover general average contributions from

Sucarseco. R. 83.

The case of the Energia was considered by the Distriet

Judge, and he properly concluded that: ‘‘The case did not

involve any of the questions presented here.’”’? R. 63.

In the ease of The Energia, that vessel ineurred port of

refuge expenses because of a collision, and Cargo laden

on board the Energia was required to contribute toward

these expenses in General Average, under the English law,

governing the place of destination of Cargo. As a result

of a trial on the liabilities, as between the two colliding

vessels, the Energia was held solely at fault, 56 Fed. 124.

In a subsequent suit brought by Cargo against its Carrier,

Energia, the Harter Act being not then in force (at eolli-

sion), and the Energia not having any statutory defense,

Cargo was allowed recovery of all its damages, both physi-

cal damage and general average contributions, direct from

Energia. The tort of the Energia there directly caused a

situation which obligated Cargo, by force of the law of

General Average, to pay its proportion of the port of refuge '

expenses. That is not the situation here, because Cargo °

was not obligated under the law of General Average, The

Irrawaddy, supra, to make the contributions. The question

is not presented here as to whether or not Cargo could re-

cover from Sucarseco it Cargo had been obligated to make

contribution under the law of General Average. On the

contrary, the question is presented as to whether or not

Cargo may recover from the joint tort feasor, Sucarseco,

contributions in General Average which it was not obli-

gated to pay to Toluma under the law of General Average.

Certainly the ruling in the ease of The Energia cannot be

controlling in a situation where Cargo seeks to enforce

against a third party tort feasor, who is a stranger to the

contract (Jason Clause), losses which it sustained only by

reason of its contract with its Carrier, Toluma. Ante,

p. 17.

Nor do the decisions in Erie & Western Trans. Co. v.

Chicago, 178 Fed. 42, and Gray’s Harbor Tugboat Co. vy.

Petersen, 250 Fed. 956, eited in the Court’s opinion, R. 83,

support its ruling here. In both cases (collisions) the inno-

cent carriers were allowed recovery of general average ex-

penditures from the solely tortious non-carriers, where the

General Average was compulsory under the law of General

Average, and not the creation of a private contract (Jason

Clause). Far from upholding the Court’s ruling, these cases

argue against it, for they support the principle that the

carrier and not the Cargo Contributors have the primary

right of recovery from the tortious colliding vessel.

Bid

The Court also cited the English case of The Minne-

tonka [1905], Prob. Div. 206, as supporting the Court’s

statement that ‘‘the same ruie pertains in England.’’ R.

83. The law of England cannot be applicable to the

questions here, and ‘‘the same rule’’ could not obtain in

England, because under English law Cargo may recover

only one-half its damages from each of two vessels equally

at fault in collision, or such percentage of its damages as

may represent the comparative negligence of the two ves-

sels, The Measure of the Damages in Maritime Collisions,

3rd Edition, by Ik. S. Roscoe, pages 20-22, and cases there

cited; and, the law of England is substantially different to

the American law, in respect of freedom of contract, The

Irrawaddy, 171 U. S., pp. 194-195. [nglish rulings ean-

not be paralleled with the American decisions on the ques-

tions here involved, therefore. But, the decision in The

Minnetonka does not go so far as to hold that the Carrier’s

right of recovery is not the primary right, if asserted; and,

the Court there undoubtedly regarded Cargo’s right as

derivative, and one of subrogation. The late Cireuit Judge

Mayer, in the case of Ralli vs. Societa, 222 Fed., pp. 999 and

1001, so regarded that decision. If this were not so, how-

ever, a decision of the Court of Appeal in England cer-

tainly could not be taken to justify our Circuit Court of

Appeals in departing from principles so clearly announced

by the Supreme Court as those here involved.

Finally, the decision of the Cireuit Court of Appeals

will result in upsetting long standing practices in adjust-

ment of shipowners’ liabilities inter sese,* and vis-a-vis

* The tabulated figures on page 1001 of the report_of the deci-

sion in Ralli v. Societa, 222 Fed. 994, show that Cargo Yeceived

back only one-half of Cargo’s total contribution, and Judge Mayer

stated that this conclusion had ‘‘support in the practice of average

adjusters,’’ p. 1001.

Cargo owners, and in the settlement of insurance liabili-

ties; and will create multiplicity of suit and confusion in

final adjustments of recoveries, as in some cases there are

hundreds of different cargo owners, each of whom would

have to sue the tortious non-carrying vessel.

But, entirely apart from these practical considerations,

the decision is so inconsistent with principles of law here-

tofore accepted by shipping interests generally, that it

should be reviewed by this Court.

LAST POINT.

THE PETITION FOR WRIT OF CERTIORARI SHOULD BE GRANTED.

Respectfully submitted,

Witiiam H. McGrayy,

Counsel.

New York, November 9, 1934.

APPENDIX.

During September, 1924, the International Law Asso-

ciation held its Thirty-Third Conference at Stockholm,

Sweden. The report of that Conference forms a part of

the record of the Association and is available at the office

of the American Branch of the International Law Asso-

ciation, and at the law libraries. The maritime work at

this particular Conference consisted in redrafting the York-

Antwerp Rules of 1890, and formulating what we now know

as the **York-Antwerp Rules of 1924.""

American interests endeavored to defer the formulation

and adoption of these new Rules at that time, as American

interests concernc:! had not sufficiently considered the mat-

ter and were not prepared to take part in the proposed

‘‘eodifieation’’ of general average practice. The American

Steamship Owners Association (comprising the majority

of American owners) deemed the matter of sufficient impor-

tance to be represented at the Conference, and to protest

the final adoption of the rules at that time. There were

representatives from all maritime nations, and, despite the

American attitude, the rules were formulated, and are now

used by a large number of foreign maritime interests,

Just as the York-Antwerp Rules of 1890 contain vari-

ances with the prior American practice, so the York-

Antwerp Rules of 1924 are not wholly in aceord with the

American practice of general average adjusting.

The subject of the 1924 Rules occasioned a conference

ealled by the Chamber of Commerce of the United States

at Washington on Mareh 16, 1925, which was attended by

a large number of representatives of commercial, shipping,

insurance, average adjusting, and legal interests. A Spe-

cial Committee was appointed, which rendered a full report

on the 1924 Rules, under date of May 15, 1925, and in which

report several objections to the Rules were announced.

The United States Chamber of Commerce, on receipt of

this report of the Special Committee, held a second confer-

ence on May 15, 1925, at which resolutions were adopted,

containing among its preambles the statement that:

‘*WuHereas this Conference, on March 16th, 1925,

adopted a resolution that the York- -Antwerp Rules

1924 in the form submitted by the Stockholm meet-

ing of the International Law Association are not

acceptable to the commercial and shipping interests

of the United States and that before the adoption

and application of said Rules by American interests

they should be modified in a number of important

respects’’;

and otherwise expressing disapproval of the 1924 Rules.

The above action of the Chamber of Commerce was

directed to effecting a reconsideration and possible modi-

fication of the Rules; but, on making representations to

the Committee of the International Law Association the

latter did not receive the suggestions favorably, and the

attempt was unsuccessful.

Later, on February 15, 1925, the Special Committee of

the Chamber of Commerce made a supplemental report, in

which it was said:

‘‘We believe that all of our objections to the

Rules are sound, and that some of them are so fun-

damental that they ought not to be waived.”’

The Committee then made certain specific reeommenda-

tions as to incorporation in shipping documents of only

parts of the Rules [together with the Jason Clause],

The result is that while the 1924 Rules are commonly

accepted among foreign shipping interests, they are 1 ‘arely

used by American Shipping interests. Ney ertheless, there

are many instances of foreign ships trading to American

ports where the ship and cargo agree by contract to adjust

general averages under the 1924 Rules. So, a situation is

possible, and indeedprobable, whereby an American owner

whose ship collides with a foreign ship would be called upon

to pay a general average expense adjusted under a rule

which would not be acceptable to the American shipowner,

that is, if cargo on the foreign ship (as here) should be

allowed to impose its private contract with a foreign ship

upon an American shipowner, whose ship has the misfor-

tune to collide with the foreign ship.

The situation outlined above presents cogent reasons

for disallowing direct recovery from the non-carrying ves-

sel, otherwise the carrier and the cargo carried may impose

upon the non-carrier special rules for adjusting general

average, not known to nor contemplated by the non-carrier,

and which might not be acceptable to the latter if it wer?~~

contracting as a carrier with its own cargo.

(62)

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