Brief for the United States as Amicus Curiae — Waterman Steamship Corp. v. Dugan & McNamara, Inc.

pa eee rah Sgt 8 8

Ae , e ;

Opinions below..

Jurisdictioonn F

Interest of the United States 8 bee

Summary of Argument

Argument:

I. The shipowner's right to indemnity c on the

stevedoring. contractor’s warranty exists

where the contractor is hired by the con-

signee of the cargo 6

II. The right to indemnity exists * the Whip-

owner suffers loss in personam 11

JW ͤ A 1 13

= CITATIONS

Cases: :

Atlantic Transport Co. v. Imbrovek, 234 *

TPTA AAA 7

Crumady v. The Jane Hendrik Fisser, 358

„„ 4, 5, 6, 7, 8, 9, 10, 11, 12

Halcyon Lines v. Haenn Ship Corp., 342 U.S.

r a on 8

MacPherson v. Buick Motor Co., 217 N.Y. 382,

c dN 10

Müchell v. Trawler Racer, Inc., 362 U.S. 530. 7,13

Ryan Stevedoring Co. Inc. v. Fun- Allantie Corp. is

, ̃ A 4, 5, 7, 11

Seas Shipping Co. v. Sieracki, 328 U.S. 85. 7, 10, 11

The Osceola, 189 U.S. 158888. 12

Weyerhaeuser 8.5. Co. v. Nacirema Co., 355 U.S.

00 Same nn

56128360 . (I) 9

Miscellaneous:

Restatement of Contracts, Section ——

Robinson on nn. 857 p. 99333

3s te — Gout of the United ure

Ooronrn TERN, 1960

No, 35

' WarerMAN STEAMSHIP CORPORATION, PETITIONER

| 3

Dugan & McNamara, INC. - |

ON WRIT OF CERTIORARI TQ THE UNITED STATES COURT OF

APPEALS FOR THE THIRD CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

OPINIONS BELOW

The United States District Court for the Eastern

District of Pennsylvania filed no written opinion in

directing a verdict against the petitioner (R. 13-17).

The first opinion of the United States Court of Ap-

peals for the Third Circuit. (R. 20-26), later with-

drawn, is reported at 1959 AMC 411. The second

opinion of the Court of Appeals (R. n is 2.

at 272 F. 2d 823.

The W of the Court of Appeals was entered

on November 17, 1959 (R. 38). The petition for

ceertiorari was filed on February 11, 1960, and granted

5 (1) 3

2

on March 28, 1960.. The jurisdiction of this Court

rests on 28 U.S.C. 1254(1). |

Whether a 1 has a right of indemnity

directly against a stevedoring contractor hired by the

consignee of the ship’s cargo, when the shipowner

suffers a liability in personam as a result of the con-

tractor’s breach of warranty of workmanlike service.

| STATEMENT

‘Petitioner Waterman. Steamship Corporation is the

owner of the vessel S. S. Afoundria. Respondent,

Dugan & McNamara, Inc., a stevedoring contractor,

was engaged in unloading the vessel in Philadelphia

on August 9, 1952, when Jasper King, one of its long—.

shoremen, was injured by being struck by several one-

hundred pound bags of sugar (R. 3-5). King sued

petitioner in the Eastern District of Pennsylvania,

alleging that the:bags had fallen on bim as a result of

a petitioner’ 8 negligence and the unseaworthiness of

the vessel.

‘Petitioner thereafter entered into a settlement

agreement under which it paid King $6,867.55 (R. 9.

14), and filed a third-party complaint against re-

spondent to recover it. This complaint, as amended -

(R. 7-10), asserted that respondent had adopted an

unsafe unloading procedure under which tiers of bags

were allowed to stand at a height of six feet or more

_* Respondent has agreed that this represented a reasonable

settlement for King’s injury, assuming petitioner was liable- for

King's injuries (see respondent’s brief in opposition to the peti-

tion for certiorari, p. 4). . : :

| . 3

without support, and that this failure “‘to perferm the

_ contracted stevedoring services in a safe, proper, cus

toma ry, careful and workmanlike manner under the

circumstances” was the direct, proximate, and substan-

tial cause of, the injury to King (R. 8-9).

At the trial, the parties stipulated that there was no

express agreement between petitioner and respondent

for the unloading of the ship (R. 12-13). The dis-

trict court directed a verdict on the ground that, since

tere was no direct contractual ‘relationship: between

petitioner and respondent, petitioner had no right of

indemnity against the respondent (R. 16).’

Petitioner appealed to the Court of Appeals for the

Third Cireuit. On January 16, 1959, that court, en

banc, Chief Judge Biggs dissenting, filed an opinion

affirming the district court on the basis of the lack of

contractual relationship between the parties (R.

20-26). N

On February 24, 1959, this Court heid that a ship,

‘liable in rem to a longshoreman 4s a result of the

failure of the stevedoring contractor to perform its

work safely, is entitled to indemnity from the con-

lt appears that the National Sugar Refining Company, as

' consignee of the S. S. Afoundria’s cargo of sugar, engaged the

respondent to unload it (R. 15, 355.

The court also stated that the evidence disclosed no negli-

gence on the part of petitioner and that the sole caus of the ;

accident was respondent's negligence in allowing the bags to be

piled too high. Hence, the court reasoned, j<iitioner, never

liable to King, had made its settlement with him “as a volun-

teer”, and could not recover indemnity from the respondent,

even if it might have a right to indemnity for amounts‘paid by

it where it was actually liable. See p. 13, lala, in. 6.

D.

d

4 .

tractor directly despite the absence of direct con-

. traétual relationship between the contractor and the

owner. Crumady v. The Joachim Hendrik Fisser,

358 U.S. 423. The Court of Appéals thereupon with-

drew its first opinion and —* a = (R.

N, 31).

On November 5, 1959, the court equi affirmed the

district court’s judgment. The court distinguished

Crumady an ‘the grounds that (1) the stevedoring con-

tractor in Crumady had dealt with the charterer of

the ship, while here the contractor had been engaged

by the consignee of the cargo (see p. 3, supra, fn. 2),

and (2) in Crumady, the ship itself was seeking in-

demnity for a liability suffered by it in rem, while in

this case the shipowner claimed * for its

W in personam.

INTEREST OF THE UNITED STATES _

That a shipowner possesses a right of indemnity by

reason of the stevedoring contractor’s warranty of

workmanlike service was settled in Ryan Stevedoring

Co., Inc. v. Pan-Atlantic Corp., 350 U.S. 124, and re-

affirmed in Weyerhaeuser S. S. Co. v. Nacirema Co.,

355 U.S. 563, in both of which cases the United States

participated as amicus curiae. And in Crumady v.

The Joachim Hendrik Fisser, 358 U.S. 423, where the

United States again pafticipated as amicus curiae,

this Court made it clear that the contractor’s war-

ranty, and hence the right to indemnity for losses re-

sulting from its breach, inures to the ship regardless

of whether or not there was a direct contractual rela-

tionship. between the stevedoring: contractor and the

*

s

5

vessel's owners. As in Ryan, Weyerhaeuser, and

Crumady, the United States, as not only the world's

largest shipowner, but also the world’s largest con-

signor and consignee of cargoes, and in that capacity

an employer of stevedoring contractors on behalf of

private shipowners, is directly interested in the ques-

tion posed in the present case—t.e., whether circuity

may be avoided and the right of indemnity asserted

directly by the shipowner against the stevedoring con-

tractor when the contractor was hired for the ship by —

the consignor or consignee of the cargo, and when as

a result of the contractor’s breach of warranty, the

shipowner suffers liability in personam. Unless the

ship’s claim for breach of warranty can be thus as-

serted directly against the contractor, in line with

Crumady, it will be necessary for the shipowner first

to sue the United States (or other consignor or con-

signee who hired the stevedore contractor) on its con-

tract: of carriage with the shipowner and then for the

consignor or consignee, in its turn, to seek recovery

over on its contract with the stevedore. a

SUMMARY OF ARGUMENT |

When a stevedoring contractor goes ahead a ship

to perform the shipowner’s stevedoring requirements,

the contractor warrants that it will perform its service

competently and safely. Ryan Stevedoring Co., Inc. v.

Pan- Atlantic Steamship Co., 350 U.S. 124; Weyer-

kaeuser S. S. Co. v. Nacirema Co., 355 U.S. 563. This

warranty affords the ship a right of indemnity for lia-

bility in rem suffered by it as a result of the stevedor-

ing contractor’s breach of warranty, despite the fact

„

6

that the contractor was engaged to serve the ship by

its charterer, rather than by the shipowner. Crumady

v. The Joachim Hendrik Fisser, 358 U.S. 423. The

narrow question presented here is. whether the right to

indemnification, in the absence of direct contractual

. dealings, is affected by the fact (1) that the stevedor-

ing contractor is hired by the consignee of the ship’s

cargo, rather than the charterer of the ship, or (2)

that reimbursement is sought for a liability suffered

by the shipowner in personam, rather than by the ship

‘for a liability in rem. Our position is that the two

bases given by the Court in Crumady for extending

the ship’s right of indemnity for losses to cases where

‘the charterer employs the stevedoring contractor—the

intent, of the parties to the stevedoring contract to

benefit the ship and its owners, and the foreseeability. .

of loss by them as a result of the stevedore’s breach

of warranty—militate equally in favor of allowing the

shipowner recovery for liability in personam suffered

by it in-eases where the contractor is hired for. the

ship by the consignor or consignee of the ship’s cargo. .

ARGUMENT

al

THE SHIPOWNER’S RIGHT TO INDEMNITY ON THE STEVE-

DORING CONTRACTOR'S WARRANTY EXISTS WHERE

‘THE CONT! cron IS HIRED BY THE CONSIGNEE OF

THE CARGO-

The prineipal basis for the holding of the Court of

Appeals that, as a matter of law, the shipowner was

not entitled to recover for losses it suffered as a

* =

result of the stevedoring contractor’s breach of its

warranty of workmanlike service seems to have been .

the fact that in this case the stevedoring contractor

had boarded the vessel and performed services for its

owner pursuant to an agreement with the consignee

of the cargo, while in Crumady v. The Joachim Hen-

drik Fisser, 358 U.S. 423, the stevedoring contractor

had been hired by the charterer of the ship. We

submit that this attempt to avoid the impact of

Crumady is without merit. It ignores the nature of

the stevedoring contractor’s inescapable and essential

warranty of competent and safe performance of its

services, as. set out in. Crumady, in Ryan Stevedoring

Co., Ine. v. Pan-Atlantic Corp., 350 U.S. 124, and in

_ Weyerhaeuser S. S. Co. v. Nacirema Co., 355 U.S. 56389

The operation of loading or unloading a vessel,

historically performed by: the vessel's crew, has, be-

cause of the advantages of more modern divisions of

labor (Seas Shipping Co. v. Sieracki, 328 U.S. 85,

| 96), become a “‘snecialized service performed for the

ship and her owner by contractors: Atlantic Trans-

port Co. v. Imbrovek, 234 U.S. 52, 61. This develop-

ment, however, did not change the shipowner’s abso-

lute and non-delegable duty to provide a ‘seaworthy

vessel for a longshoreman in the employ of a contrac-

tor who boards the vessel to perform the loading or

unloading portion of the ship’s work’’ on behalf of

her owner. Seas Shipping Co. v. Sieracki, supra,

328 U.S. at 95. Cf. Mitchell v. Trawler Racer, Inc.,

362 U.S. 539. 5

At the same time, the shipowner's right to recover

indemnity from the contractor whose improper or

.

8

unsafe performance of its stevedoring service causes

the shipowner to be liable under its duty to the long-

shoreman was made clear in Ryan, supra. There, the

Court held that the contractor who goes aboard a

vessel to perform “the ship’s service with the owner’s

consent” (Seas Shipping Co. v. Steracki, supra, 328

U.S. at 97) assumes, in return for its employment,

“responsibility for the prqper performance of all the

[shipowner's] stevedoring requirements, including the

court below stated (R. 35), a claim for indemnification on the

discharge of foreseeable damages resulting to the ship-

owner from the contractor’s improper performance of

those requirements.“ 350 U.S. at 129, n. 3. See, also,

Weyerhaeuser S.S. Co. v. Nacirema Operating Co.,

supra, 355 U.S. at 565. . Competency and safety are,

the Pourt said in Ryan, inescapable elements of the

service undertaken” and are of the essence of [the

contractor’s] stevedoring contract.” The contractor’s

“warranty of workmanlike service” was thus com-

parable to a manufacturer’s warranty of the sound-

ness of his manufactured product.” 350°U.S. at

133-134. ö

In Crumady, this Court held that the stevedoring

contractor’ 8 assumption of résponsibility for safe and

proper work, and for the discharge of the shipowner’s

damages resulting from improper performance, was

not affected by the fact that the shipowner itself was.

“The Court also recognized (350 U.S. at 138) ‘that, as the

contractor’s warranty is quite different from a claim for contri-

bution as joint tort feasors, which, under Halcyon Lines v.

Haenn Ship Corp., 342 US. 282, cannot be brought against

a contractor by a shipowner who is liable for personal injuries

to one of the contractor’ s employees.

9

not the party who engaged the contractor for the per-

formance of the stevedoring requirements. The Court

statéd (358 U. S. at 428-429) :

The warranty which a stevedore owes when

be 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 recognizes rights in

third-party beneficiaries. Restatement, Law of

Contracts, § 133. Moreover, as we said in the

Ryan case, “competency and safety of stowage.

are inescapable elements of the service under-

taken.“ 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.

i. view of this express holding that the warranty

is for the benefit of the vessel“ whether the vessel’s

owners are parties to the contract or not’’, it is confus-

ing to say, as did the court below (R. 35), that [The

aii ean and the stevedoring company were strang- |

‘And we think it is. immaterial that the

pi ra deals with the consignee of the cargo rather |

than with the charterer. In stressing this factual dis-

tinction between this case and Crumady (R. 35), the

court below failed to perceive that, regardless of the

identity of the ‘person who hires the contractor on the

ship’s. behalf, the contractor goes aboard a vessel to

perform for the vessel and its owners a duty—non-

delegable in nature—for whose breach the latter

: ; 10

remain responsible. Seas Shipping Co, v. Steracks,

328 U.S. 85. Thus, regardléss of who engages the

stevedoring contractor—the shipowner itself, the char-

terer, the consignee, or any other. person lawfully

entitled to do so—the stevedore’s essential and ines-

capable undertaking to perform its work carefully is,

under Crumady, for the benefit of the ship and its

owners. Restatement of Contracts, Section 133.

Moreover, the alternative basis assigned by this

Court for the result it reached in Crumady shows con-

_ Clusively, we think, that the fact that the consignee

and not the charterer engaged the stevedore on be-

half of the vessel should make no difference in

the outcome. As pointed out above (p. 9, supra),

the Court concluded that the stevedoring contractor’s

warranty was comparable to the manufacturer’s war-

ranty of its manufactured product. MacPherson v. .

Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050. Under

McPherson, the manufacturer’s liability for defects

in his produet extends to all those whom the manufac-

turer can foresee could be injured as a result of negli-

gence in manufacture of the article. 111 N.E. at 1054,

217 N.Y. at 394. In this case, there can be no doubt

that the stevedoring contractor „performing the ship's

Though the record js barren on this péint, the obligation of

obtaining the contractor to perform the stevedoring service was

necessarily undertaken by the consignee of the goods as part of

its contract with the consignor, who, in turn, made such an un-

dertaking in its contract with the shipowner. Thus, the ship and

its owners are probable creditor beneficiaries. Restatement of

Contracts, Section 133(b). However, in the unlikely event that

RO obligation on the part of the person hiring the steve —

dore could be established, the ship would clearly be a “dones

beneficiary”. Id., Section 133 (a).

1

service with the owner's consent” ( Seas: ‘Shipping Co

v. Steracki, supra, 328 U.S. at 97) can foreste—re-

gardless . of the person who engaged it to do the

work—that if it fails to perform its services safely

the shipowner, which has an-absolute and nondelegable

duty to provide a seaworthy vessel for the contraetor’s

employees who perform its work, may suffer liability.

Thus, under one ground of the decision in Cramady

(the intention of the stevedore and the person who

engages him to do the work for the benefit of the ship

and its owner) and also under the second ground (the

foreseeability by the contractor of loss to the ship-

owner from the contractor's failure to perform the

loading or unloading safely and competently) the

shipowner, regardless of who engaged the stevedoring

contractor, is entitled to recover from that contractor

for loss resulting from the eontractor’s beach of its

waranty to peform the ship’s stevedoing requirements

| carefully.

. *

I

THE RIGHT TO INDEMNITY EXISTS WHERE THE SHIPOWNER

SUFFERS LOSS JN PERSONAM |

It is similarly, irrelevant that this petitioner seeks

reimbursement for a personal liability undergone by

it, while in Crumady the ship owner claimed reeovery

over for a liability suffered by it in rem as a result of

tlie stevedoring contractor’s breach of its warranty of

workmanlike service.

_ Under Ryan and W eyerhaeuser, where the ship-

owner hires the contractor direct, and as a result of

ot

the latter’s breach of warranty becomes liable for

failure to provide a longshoreman with a seaworthy

vessel on which to work, he may recover his damages.

And, in Crumady, where there was no direct contract |

between the shipowner and the contractor, indemnity

was allowed a ship suffering liability in rem as a re-

sult of the longshoreman’ s injuries due to unsea-

worthiness.

The ship and its owner, are, of a

ject to liability for a breach by the contractor of tha

owner's nondelegable duty to provide a seaworthy

vessel. The Osceola, 189 U.S. 158, 175, Robinson on

Admiralty, § 57, p. 405. There is no rational ground,

then, for making indemnity dependent upon whether.

the longshoreman decides to sue the shipowner in

personam, or instead ‘to proceed against the vessel in

rem, And the reasoning underlying the decision in

Crumady requires that the right of recovery extend

to the shipowner as well as to the ship in cireum-

stances where the contractor is hired by someone other

than the shipowner (as the right of indemnity does

extend in cases where the stevedore and the owner

éontract directly). The owner, since it must respond

in damages for the contractor’s breach of warranty of

- workmanlike service, is, as much as the ship, the in-

tended beneficiary of the warranty (see pp. 9-10,

@ .

supra) and the foreseeable victim of its breach by the

contractor’s negligence (see pp. 10-11, supra).

13

CONCLUSION

| For the foregoing ‘reasons, the judgment of the

court of appeals should be reversed.°

Respectfully submitted.

J. LEE RANKIN,

| Solicitor General.,

Grorce CocHRAN Dovs,

Assistant Attorney General.

ALAN S. ROSENTH At,

Wuuiam E. MULLIN,

; Attorneys.

Avaust 1960. :

„The court of al, als did not pass upon the second ground

assigned by the district court for directing a verdict against

petitioner, viz., that petitioner was not negligent and hence not

liable to King, and had settled with him as a volunteer. See

p. 3, supra, fn. 3. We think this ground is without merit.

The — was clearly made unseaworthy because of respond-

ent’s breach of its warranty of skillful performance, since it is

undisputed that the bags were piled dangerously high. Under

Mitchell v. Trawler Racer, Inc., 362 U.S. 539, a — is

liable in these circumstances. f

>

+ @.S GOVERNMENT PRINTING OFFICE 1960

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