Brief for Petitioner — Waterman Steamship Corp. v. Dugan & McNamara, Inc.

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Supreme Court of the United States

October Term, 1960.

No. 35.

WATERMAN STEAMSHIP CORPORATION,

Petitioner,

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DUGAN & McNAMARA, INC.,

BRIEF FOR PETITIONER. —

Tuomas F. Mount, _

Harrison G, Kripare,

Grorce M. Bropxeap,

J. Weties HENDERSON,

1910 Packard Building,

a Philadelphia 2, Pa.,

Counsel for Petitioner.

International, 711 So. S0th St., Phila. 43, Pa.

Respondent.

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TABLE OF CONTENTS OF BRIEF FOR PETITIONER.

Page

Opinions or THE Covrts Brow |............. Ke ts 1

J EEN AS SES APRS ae etre rr, 2

‘Question PresENTED. ..... Wh andees ce laane Cae 2

Sratement or THE Case .............. PTT ETE ly

ARGUMENT .......... EL Oe une iaiae eee eee pepe rer Corio F

The Shipowner Is Justly Entitled to Benefit by the

Stevedore’s Warranty of Workmanlike Serv- |

ice Without Regard to Contractual Privity ... 6

CONCLUSION ......... i w<ieeateaeecaneaaie exneees ll

TABLE OF CASES CITED.

oe

Alaska Steamship Co. v. immed 347 U.S. 396

SG ee pic) pone ee 10

‘Crumady v. The Joachim Hendrik Fisser, et al. v.

Nacirema Operating Co., Inc., 358 U. S. 423

(008) ....... rere

Grilléa v. United States, 232 F. 2d 919 (C. A. 2.1956) 10

MacPherson v. Buick Motor €o., 217 N. Y. 382, 111

SSD i-0a6ckh nd ddubh un keee ake ednen mares ao

Ryan Co. v. Pan-Atlantie Corp., 350 U. S. 124 ..... . -6,7,8

Weyerhaeuser S. S. Co. v. Nacirema Co., 355 U.S. 563-6

ee 3 STATUTES CITED.

Restatement, Law of Contracts, Sec. 133 ........... ee

28 U.S..C., Section 1254(1) ........... S Scubaek reer , 2

‘Supreme Court of the United States.

Octoser TERM, 1960.

No. 35. |

WATERMAN STEAMSHIP: CORPORATION,

Petitioner,

v.

DUGAN & MC NAMARA, INC,

Respondent.

©

On Writ or CertiorarRI To THE Unitep States Court oF

APPEALS FOR THE TuHiRbd Circuit.

BRIEF FOR PETITIONER.

This case comes before the Court on writ of certiorari

issued to review the final judgment of the United States

Court of Appeals for the Third Circuit.

OPINIONS OF THE COURTS BELOW.

The statements of. the trial judge addressed to the jury

at the close of the trial in connection with granting respond-

ent’s motion for judgment under Civil Rule 50 are printed -

at R. 13 to 17.. The Court’s order for sngsent appears at

R. 18.

The opinion of the Court of Appeals for the Third

* Circuit affirming the judgmént of the Court below, filed on

January 16, 1959 and later withdrawn, is reported in 1959

American Maritime Cases at page 411, but not in the Federal

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2 : Brief for Petitioner

~—Peporter, and appears at R. 20 to 21. The dissent of Chief

Judge Biggs is printed at R. 21 to 26.

The order of the Court of Appeals granting ay to the

petitioner to file a petition for rehearing out of time appears

at R. 27 and 28. The order granting petitioner’s request for

a rehearing, vacating the judgment entered on January 16,

1959, withdrawing the opinion and dissenting opinion then

filed, and permitting the parties to file supplemental briefs

as to the effect of the decision of the Supreme Court of- the

United States in Crumady v. The Joachim Hendrik Fisser,

et al. v. Nacirema Operating Co., Tne., reported at 358 v. Ss.

423 (1959), appears at R. 31. °

_ The final opinion of the Court of Appeals dihieiae the

"judgment of the Court below, filed on November 17, 1959

and reported at 272 F. 2e1 823 (1960), is printed at R. 32 to

35, with the dissenting opinions of Chief. Judge Biggs and °

two other members of the court beginning at R. 36.

_ JURISDICTION.

_ The jurisdiction of this Court to review the final judg-

ment. of the United States Court of Appeals for the Third

Cirevit is provided in 28 U. S. C., Section 1254(1). -

The final judgment of the United States Court of. Ap-

peals for the Third Circuit: was entered on November 17, |

1959 (R. 38). Petition for writ, of certiorari was granted ”

this Court on March 28, 1960 (R. 39).

QUESTION PRESENTED.

May a shipowner, having paid damages to a longshore-

_ Man injured on its vessel, obtain indemnity for its.loss. -

against the stevedore whose breach of contract through sub-

' standard ‘performance caused the injury to the longshore-

man, there being no express contract between the shipowner

and the stevedoring company for the unloading of the ship?

_ Brief for Petitioner a ne meters

STATEMENT OF THE CASE.

The plaintiff longshoreman, was injured in the hold of

petitioner’s vessel, Steamship Arousprta, while employed

by ‘respondent to discharge a cargo of bagged sugar. The

evidenee showed that the lougshoreman was struck by bags

of sugar falling from the stow by reason of the fact that his

employer and its representatives in charge of the work had.

adopted a procedure which was improper and dangerous.'

_ ~The vessel had been chartered by petitioner as ship-

owner to the sugar refining company, which in turn had.

contracted through its subsidiary, as consignee, with the

respondent stevedore to unload the cargo at Philadelphia ?

' (R- 15, 35).. There was no express contractual preengunent

between the shipowner and the stevedoring — (R.

12, 13,-21, 35).

1. See comiments of Chief Judge Biggs at R. 23 and 36..

2. This contractual relationship was disclosed during the trial

to the trial judge, who accepted it as an established fact in the case in

the course of his closing remarks to the jury (R. 15). Both Opinions~

and all Dissents in the rt of Appeals were predicated upon the

existence of a contract een Dugan & McNamara, Inc., as steve-

dore, and National Sugar Refining Company as owner and. consignee

of the cargo (R. 21, 35). Respondent admits the contractual relation-

ship in its Brief in Opposition to Petition for: Writ cf Certiorari, under

Point V of Counter-Statement of the Questions Involved, at page 6.

3.. The absence of contractual. privity. was stipulated during the :

trial in a sidebar conference (R. 12, 13). The sole question under ~

consideration at that time was the existence of an express contract

between petitioner and respondent. The Court of Appeals was in-

correct in assuming, as it did, that whatever the contract arrangement

may have been, “the shipowner * * * claims no benefit under it”

(R. 21), or “claims no standing under it.” (R. 34). Petitioner’s

counsel admitted that there was no contract, written or oral, between

the shipowner and the stevedore, “though of course we deny its

materiality under the cases.” Counsel was not questioned, and did not

state, whether he “claimed benefit” or “claimed standing” under the

contract existing between the stevedore and - consignee of the

cargo.

a Brief for Petitioner

Previous to the trial, petitioner had settled the plain-

tiff’s injury claim for a sum which respondent agreed was -

fair and reasonable (R. 14).

After both parties liad presented their testimony, the

trial judge sustained respondent’s motion to dismiss, treat-

"ing it as a motion for judgment under Civil Rule 50 (R. 17).

The Court ruled as a matter of law that there was no right

of indemnity without an express contract having been en-

tered into between the nis ae ner and the stev ~_—_ (R. 15, .

16).

The petitioner appealed, and the first enindis tine

was heard by the Court. of Appeals on June 10, 1958. ‘By

‘request of the court, the appeal was re-argued before the

_eourt en banc on December 1, 1958. Ina Per Curiam opinion,

- the Court affirmed the Court below exclusively on the ground |

that no indemnity could be allowed as a matter of law be-

cause ‘‘any obligation of a stevedoring company to ir-

demnify a ship for shipboard injury of its employees in the

course of their employment must be bottomed on agreement

between the parties, expressed or implied in. fact’’ (R, 21).

Chief Judge Biggs, dissenting, stated that on the evi-

dence the jury ‘‘would have been entitled to find, as con-

tended by Waterman, that the ‘direct, proximate, active and

_ substantial cause of the accident’ was the negligence of the

" stev redoring company,’’ and that ‘‘indemnity for the ship-

owner need not necessarily be based on an express contract

- between the shipowner and the stevedoring sia ial (R.

23, 24).

Thereafter, this Court reversed the Court of Appeals

{for the Third Circuit in Crumady v. The Joachim Hendrik

Fisser, et al. v. Nacirema Operating Co., Inc., supra.

The Court of Appeals then set aside the judgment here-

in, withdrew the first opinion and dissent upon petitioner’s

e>

motion for rehearing, and heard reargument before the

court en banc to consider the effect of the :‘Crumady decision

upon the present appeal (R. 31).

Brief for Petitioner - 5

On November 17, 1959 the Court of Appeals decided,

with the Chief Judge and two other members of the court

dissenting, that the Crumady. decision, did not alter the

requirement of contractual privity between the shipowner

and the stevedore unless the stevedoring company, as in

Crumady, had entered into a contract with the operator of

the vessel (R. 32 to 35). The contract in the present instance.

having been made by the stevedoring company with the con-

signee of the cargo, the Court of Appeals affirmed the

judgment of the Court below (R. 35).

' 429 as follows:

6. . Brief for Petitioner

ARGUMENT.

The Shipowner Is Justly Entitled to Benefit by the Steve-

dore’s Warranty of Workmanlike Service sit

Regard to Contractual Privity.

The principle that the shipowner is entitled to benefit

by the stevedore’s warranty of workmanlike service with-

out regard to contractual privity has already been decided

by this Court.

In Crumady v. The Joachim Hendrik Fisser, et al. v.

Nacirema Operating Co., Inc., 358 U. S. 423 (1959), the

services of the stevedore had. been contracted for by the

charterer, as operator of the vessel. A longshoreman was

injured due to substandard performance by the stevedoring

. company’s employees, who brought into play, a hazardous

and unseaworthy condition of the ship’s winch controls.

The l!ongshoreman recovered damages against the ship- .

owner. This Court found that the shipowner was entitled

to full indemnity from the stevedore, stating at pages =

‘‘A majority of the Court ruled in Ryan Co. v.

Pan-Atlantic Corp., 350 U. S. 124, that where a ship-

owncr and stevedoring company entered into a service

agreement, the former was entitled to indemnification |

for all damages it sustained as a result of the steve-

_ doring company’s breach of its warranty of workman-

‘like service. And see Weyerhaeuser S. S. Co. v. - Naci-

rema Co., 355 U. S. 563. * * *

‘*We think this case is governed. by the principle

.announced in the Ryan case. The warranty which .a

stevedore owes when he goes aboard a vessel to per- -

form services is plainly for the benefit of the vessel

whether the vessel’s owners are parties to the contract

or not. That is enough to bring the vessel into the

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Brief for Petitioney 8 =. . °° 7

zone of modern law that recognizes. rights in third-

_ party beneficiaries. Restatement, Law of Contracts,

Sec. 133. Moreover, as we said in the Ryan case, ‘com-

petency and safety of stowage are inescapable elements

of the service undertaken.’ 350 U.S. at 133. They are

part of the stevedore’s ‘warranty of workmanlike

service that is comparable-to a manufacturer’s war-

ranty of the soundness of its manufactured product.’

Id. at 133-134. See MacPherson v. Buick Motor Co.,

‘217 N. Y. 382, 111 N.-E. 1050.

‘‘We conclude’ that since the negligence of the

stevedores, which brought the unseaworthiness of the |

vessel into play, amounted to a breach of the warranty _

‘of workmanlike service, the vessel may recover over.’’.

(Emphasis supplied.)

The only factual difference between this case and the

Crumady case is that in the present case the stevedore was

engaged by fhe consignee of the cargo, rather than by the ©

operator of the vessel as in Crumady. Such factual dif-

ference is immaterial, and indemnity should be granted to

the shipowner (petitioner herein) just as it was in the

Crumady case. The attempt of the Court of Appeals for

the Third Circuit to restrict the holding of this.Court in. .

the Crumady case.to contracts between the stevedore and -

an operator of the vessel is unjustified. In attempting to ©

‘do so,.the Court below stated (at R. 35):

‘‘Thus, the actual holding of the Crumady case

seems to be that a contractual undertaking of the

stevedore with the operator of a ship, who is not the

owner, to unload in a safe and workmanlike manner

inures to the-ship. In contrast the case now before us -

affords no basis for finding or assuming that the op- -

erator of. the ship had any dealing whatever with the

stevedoring company which discharged the cargo. To

the contrary,.as already pointed out, the District Court

indicated and counsel have represented that the car-

& . Brief. for Petitioner ;

riage was on such terms and conditions that the con-

signee was responsible for the discharge of: its own

‘goods and arranged with the stevedoring company-fer——

the performance of that job. The shipowner and the

stevedoring company were strangers. It necessarily

follows that the alleged duty upon which the present

claim rests can only be an imposition on a wrongdoer

in invitum. It is a question of tort liability, rather

than. one of contract or warranty, whether either

wrongdoer must share the burden of a recovery by the

_injured party against the other wrongdoer. In reality

we have here a problem of contribution between tort-

‘feasers and not one of indemnification for breach of

warranty.’’ (B. 35)

This misconception of the reasoning involved in the

Crumady decision completely disregards the right of the

shipowner as third-party beneficiary. Nothing in the lan- |

guage used by this Court in the Crumady case suggests an

intention to limit the third-party beneficiary principle to

contracts by stevedoring: companies with ship operators. |

In the Ryan case this Court stressed the obhigation of the -

stevedore to perform the contract in a workmanlike manner

and allowed indemnity to the shipowner for. breach of the

stevedore’s warranty of workmanlike service. In the Ryan

case, the question of contractual privity did not: arise, be- . -

cause the shipowner had directly engaged the services of

the stevedore. In the Crumady case this Court again ap-

plied the analogy. of the manufacturer’s warranty to the

stevedore’s service and held that this warranty inured to

the benefit of the wn sateen regardless | of contractual

privity.

. The Court of Appeals fer ‘the Third Circuit erred in

failing to recognize that the privity rule had already been

rejected by this Court, and then misapplied the Crumady

décision by attempting to limit its scope.

Nof can this case and the Crumady. case be distin-

guished on the oan that the action in Crumady was

: . Brief for Petitioner es 9

against the vessel in rem, since the shipowner, whether he

is sued in personam or defends as claimant of the vessel, in

a suit in*rem, sustains like damages in either case as the

result of the stevedoring. company ’s breach of warranty.‘

The Court below also erred in concluding that the ship-

. owner and the stevedoring company in this case were

“strangers”? and that petitioner (shipowner) is, in effect,

a joint tortfeasor barred from recovery of contribution.

-Rather than representing a ‘‘prohibited misuse ‘of the con-

cept. of indemnity to obtain contribution,’’ this case is

identical in principle with ‘the Crumady case.

The concept of. a shipowner as ‘‘stranger’’ to the

stevedore who discharges the cargo from his vessel, requir-

ing the stevedore to make use of the ship’s equipment and

generally to perform one of the traditional duties of the ©

crew, Gannot be accepted. Although the stevedore may not

contract directly with the shipowner, he does not come

aboard the vessel as a trespasser. Someone having a direct

“¢nterest in the business of the vessel has contracted for the

stevedoring services, and whether the contract was made

by the shipowner, the ship’s operator, or the consignee of .

the cargo, the work of the stevedore is ultimately for the

benefit of both the shipowner and. himself:’ He comes. .

aboard with the same authority to carry out the work as

though the shipowner had directly contracted for the work

* and requested him to perform the services in a safe, proper —

and workmanlike manner.

Finally, in principle, irrespective of the Coun case,

‘the shipowner is entitled to indemnity from shore con-

tractors regardless of contractual privity.

The shipowner’s absolute and non-delegable duty. to

furnish a seaworthy vessel and equipment impuses a unique

4. Crumady sued Steamship Joacnim Henprik Fisser, her

engines, etc., in rem, and her owners Joachim Hendrik Fisser and/or

Hendrik Fisser in personam. - No service was made upon the indi-

vidual respondents in personam. Upon attachment of the vessel in

rem, Hendrik Fisser Aktien Gesselschaft ane as owner and

claimant.

10 Brief for Petitioner

. and burdensome form of liability without fault. The ship-

" owner, or’ the vessel in rem, is liable not only for furnishing

unseaworthy premises and gear to workmen, but it has been

held that liability for injuries to shore workmen. may arise

from accidents caused by defective appliances brought

aboard by their own employer, Alaska Steamship Co. v. ”

Petterson, 347 U.-S. 396 (1954), and for the misuse of sea-

worthy equipment. by longshoremen, Grillea. v. United .

States, 232 F. 2d 919 (C. A. 2, 1956). As. the orbit of

‘liability increases, there is a corresponding increase of in-

. stances where the absolute liability of the vessel or ship-

owner for injuries caused by unseaworthiness is due en-

tirely to the fault or acts of others.

The.-exposure of ‘the shipowner to such claims is in-

creased by his lack of actual control over the circumstance

which create his liability. Merchant vessels are commonly .

placed by charter under the contro! of others than the ship-

owner, and charterers often transfer control and manage-

ment of their ships to one or more subcharterers. Foreign

owners frequently have no direct contact with the aperation .

of their ships in American waters for months at a time.

Such far-reaching responsibility of the shipowner for

the use of his véssel places him at an extreme. disadvantage

in dealing with claims of injury to shore workers drising,

from unseaworthiness, when such claims are due to sub-

standard performance by shore contractors whom the ship-

owner did not.employ, and. with whom he had no actual

privity. To deny indemnity in this situation is unjust and

unreasonable. Every shipowner is entitled to indemnity

for losses created by substandard. performance ‘by shore - -

_ contractors, by virtue of his constantly i increasing risk of -

loss under the warranty. of seaworthiness which imposes .

liability without fault. Absence of contractual privity does

not justify setting up a separate standard of recovery.

If the decision of the Court below is to stand, two .

identical ships at adjacent piers, employing the services of

the same stevedoring company for loading or discharging

o

Brief for. Petitioner Can

the same type of cargo; sued by longshoremen for injuries

resulting from identical conduct amounting to breach of the

stevedore’s warranty of workmanlike sérvice, would be al-

. lowed-or denied indemnity solely on the point of privity. .

If the shipowner or operator of one ship had engaged the

services of the stevedore, indemnity, wquld be allowed. If

the consignee of the cargo on the other ship had engaged the

services, indemnity would be denied. ‘This result is neither

at nor realistic.

CONCLUSION.

‘The third-party beneficiary principle invoked in the ~

Crumady decision (which controls this case) represents a.

logical and orderly development of contract law in the field

- of maritime relationships and furnishes needed relief to all

shipowners: exposed to the risk of loss by injury to shore

workers through substandard performance of stevedoring

contracts. It is not limited, as the Court of Appeals for the

Third Circuit has held in this case, to owners and operators

of ships, but applies to any contract which the stevedore

-may make, under which he goes aboard the vessel to render

services. The law has been simply and directly stated by

this Court in a en case (358 U. S. at 428) as fol-.

lows:

_- _ ie warranty which a stevedore owes when he

goes aboard a vessel to perform services is plainly for

the benefit of the vessel whether the vessel’s owners

are parties to the contract or not. That is enough to:

bring the vessel into the zone of modern law that recog-

nizes rights in third-party beneficiaries.”’

Petitioner submits that the Court below erred in hold-

ing as a matter of law that petitioner, as shipowner, had no

right of indemnity against the respondent stevedore without

being a party fo the contract for the services which were

being performed aboard Steamship Arounpria when the

longshoreman was injured, thereby causing loss to the

12 mt aad Petitioner —

shipowner through alleged substandard ‘performance by —

the stevedoring company. —

Petitioner respectfully requests this Court to reverse

the decision-of.the Court of ‘Appeals for the Third Circuit,

and to remand the proceeding for a new trial on the issue

of substandard performance which was not submitted to

the jury because of the summary-judgment on the question

of privity.

, Respectfully ‘submitted, -

THomas F. Mount,

Harrison G. Krpare,

Gzorcz M. BropHeap, —

J. Weties Henpenson,

Counsel for Petitioner.

Dated: August 15,1960.

Philadelphia, Pennsylvania.