Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp.
Opinion of the Court
delivered the opinion
This case presents two questions as to the liability of a stevedoring contractor to reimburse a shipowner for damages paid by the latter to one of the contractor’s longshoremen on account of injuries received by him in the course of his employment on shipboard. 1. The first question is whether the Longshoremen’s and Harbor Workers’ Compensation Act
In 1949, respondent, Pan-Atlantic Steamship Corporation, a Delaware corporation, operated the SS. Canton
A few days later, on July 20, 1949, in navigable water at a pier in Brooklyn, New York, petitioner engaged in unloading these rolls. While one of petitioner’s Brooklyn longshoremen, Frank Palazzolo, was working in Hatch No. 3, one roll, weighing about 3,200 pounds, broke loose from the others, struck him violently and severely injured his left leg. There is no evidence that he was negligent. On the other hand, it appears that the rolls in Hatch No. 3 had been insufficiently secured when stowed by petitioner in Georgetown. This is established by the absence of proper wedges and dunnage holding the rolls in place at the time of the accident.
Also by stipulation, the shipowner’s third-party complaint was submitted on the same record to the judge who had presided over Palazzolo’s case. He dismissed the complaint. Ill F. Supp. 505. The Court of Appeals affirmed Palazzolo’s judgment but reversed the dismissal of the third-party complaint and directed that judgment be entered for the shipowner. 211 F. 2d 277. Petitioner, the stevedoring contractor, contends that the order reversing the dismissal of the impleader suit is erroneous. Because of the wide application of the case and the conflicting views that have been expressed on the issues, we granted certiorari. 348 U. S. 813. The United States filed a brief as amicus curiae in support of the shipowner and took part in the oral argument. 348 U. S. 948. The judgment was affirmed by an equally divided Court, 349 U. S. 901, but the case was restored to the docket for reargument before a full Court, 349 U. S. 926.
1. The first question is whether the Longshoremen’s Compensation Act precludes the assertion by a shipowner of a stevedoring contractor’s liability to it, where the contractor is also the employer of the injured longshoreman.
Neither court below discussed this question, although petitioner presented it to them. Petitioner’s argument is based upon the following provision in the Longshoremen’s and Harbor Workers’ Compensation Act:
“Sec. 5. The liability of an employer prescribed in section 4 [for compensation] shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife,*129 parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death, except that if an employer fails to secure payment of compensation as required by this Act, an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under this Act, or to maintain an action at law or in admiralty for damages on account of such injury or death. . . .” (Emphasis supplied.) 44 Stat. 1426, 33 U. S. C. § 905.
The obvious purpose of this provision is to make the statutory liability of an employer to contribute to its employee’s compensation the exclusive liability of such employer to its employee, or to anyone claiming under or through such employee, on account of his injury or death arising out of that employment. In return, the employee, and those claiming under or through him, are given a substantial quid pro quo in the form of an assured compensation, regardless of fault, as a substitute for their excluded claims. On the other hand, the Act prescribes no quid pro quo for a shipowner that is compelled to pay a judgment obtained against it for the full amount of a longshoreman’s damages.
Section 5 of the Act expressly excludes the liability of the employer “to the employee,” or others, entitled to recover “on account of such [employee’s] injury or death.” Therefore, in the instant case, it excludes the
In the face of a formal bond of indemnity this statute clearly does not cut off a shipowner’s right to recover from a bonding company the reimbursement that the indemnitor, for good consideration, has expressly contracted to pay. Such a liability springs from an independent contractual right. It is not an action by or on behalf of the employee and it is not one to recover damages “on account of” an employee’s “injury or death.” It is a simple action to recover, under a voluntary and self-sufficient contract, a sum measured by foreseeable damages occasioned to the shipowner by the injury or death of a longshoreman on its ship.
A like result occurs where a shipowner sues, for breach of warranty, a supplier of defective ship’s gear that has caused injury or death to a longshoreman using it in the course of his employment on shipboard. And a like liability for breach of contract accrues to a shipowner against a stevedoring contractor in any instance when the
The shipowner’s action here is not founded upon a tort or upon any duty which the stevedoring contractor owes to its employee. The third-party complaint is grounded upon the contractor’s breach of its purely consensual obli
2. The other question is whether, in the absence of an express agreement of indemnity, a stevedoring contractor is obligated to reimburse a shipowner for damages caused it by the contractor’s improper stowage of cargo.
The answer to this is found in the precise ground of the shipowner’s action. By hypothesis, its action is not based on a bond of indemnity such as it may purchase by way of insurance, or may require of its stevedoring contractor, and which expressly undertakes to save the shipowner harmless. If the shipowner did hold such an express agreement of indemnity here, it is not disputed that it would be enforceable against the indemnitor. On the other hand, the shipowner’s action for indemnity here is not based merely on the ground that the shipowner and contractor each is responsible in some related degree for the tortious stowage of cargo that caused injury to Palazzolo. Such an action, brought without reliance
The shipowner’s claim here also is not a claim for contribution from a joint tortfeasor. Consequently, the considerations which led to the decision in Halcyon Lines v. Haenn Ship Corp., 342 U. S. 282, are not applicable. See American Mutual Liability Ins. Co. v. Matthews, 182 F. 2d 322.
The shipowner here holds petitioner’s uncontroverted agreement to perform all of the shipowner’s stevedoring operations at the time and place where the cargo in question was loaded. That agreement necessarily includes petitioner’s obligation not only to stow the pulp rolls, but to stow them properly and safely. Competency and safety of stowage are inescapable elements of the service undertaken. This obligation is not a quasi-contractual obligation implied in law or arising out of a noncon-tractual relationship. It is of the essence of petitioner’s stevedoring contract. It is petitioner’s warranty of workmanlike service that is comparable to a manufacturer’s
The Court of Appeals has stated that the liability of petitioner in this case is for the performance of its obligation to stow the rolls on board ship “in a reasonably safe manner.” 211 F. 2d, at 279. That court also has affirmed the decision of the District Court which was based upon the verdict of the jury that petitioner’s improper stowage of the rolls produced either the unseaworthiness of the ship, or the hazardous working condition which is the basis for the shipowner’s liability to Palazzolo.
Petitioner suggests that, because the shipowner had an obligation to supervise the stowage and had a right to reject unsafe stowage of the cargo and did not do so, it now should be barred from recovery from the stevedor-ing contractor of any damage caused by that contractor’s uncorrected failure to stow the rolls “in a reasonably safe manner.” Accepting the facts and obligations as above stated, the shipowner’s present claim against the contractor should not thereby be defeated. Whatever may have been the respective obligations of the stevedoring contractor and of the shipowner to the injured longshoreman for proper stowage of the cargo, it is clear that, as between themselves, the contractor, as the war-rantor of its own services, cannot use the shipowner’s failure to discover and correct the contractor’s own breach
The judgment of the Court of Appeals, accordingly, is
Affirmed.
44 Stat. 1424 et seq., as amended, 33 U. S. C. § 901 et seq.
“Sec. 33. (a) If on account of a disability or death for which compensation is payable under this Act the person entitled to such compensation determines that some person other than the employer is liable in damages, he may elect, by giving notice to the deputy commissioner in such manner as the Secretary [of Labor] may provide, to receive such compensation or to recover damages against such third person.
“(b) Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person.
“(i) Where the employer is insured and the insurance carrier has assumed the payment of the compensation, the insurance carrier shall be subrogated to all the rights of the employer under this section.” 44 Stat. 1440, as amended, 33 XJ. S. C. § 933 (a) (b) and (i).
For procedure to secure an award of compensation, see § 19, 44 Stat. 1435-1436, as amended, 33 U. S. C. § 919.
A longshoreman, after accepting compensation payments from his employer without an award, may sue a third-party tortfeasor for his injuries. American Stevedores v. Porello, 330 U. S. 446, 454-456. If the facts permit, he may recover from the shipowner for unseaworthiness, or for negligence, or both. Pope & Talbot v. Hawn, 346 U. S. 406.
In the instant case, the stevedoring contractor, however, has received a contractual quid pro quo from the shipowner for assuming responsibility for the proper performance of all of the latter’s steve-doring requirements, including the discharge of foreseeable damages resulting to the shipowner from the contractor’s improper performance of those requirements. See Restatement, Contracts, §§ 334, 330; Bethlehem Shipbuilding Corp. v. Gutradt Co., 10 F. 2d 769; Mowbray v. Merryweather, [1895] 2 Q. B. 640 (C. A.).
See § 33 (a) in note 2, swpra.
There is nothing in the legislative history of the Compensation Act calling for a contrary interpretation. Our interpretation of that Act is supported also by that of the New York Workmen’s Compensation Act upon which it is modeled. The latter Act provides that the— “liability of an employer [for compensation] prescribed by the last preceding section shall be exclusive and in place of any other liability whatsoever, to such employee, his personal representatives, husband, parents, dependents or next of kin, or anyone otherwise entitled to recover damages, at common law or otherwise on account of such injury or death . . . .” McKinney’s N. Y. Laws, Workmen’s Compensation Law, § 11.
See Westchester Lighting Co. v. Westchester County Corp., 278 N. Y. 175, 15 N. E. 2d 567. Other state courts have reached comparable results as to exclusive liability clauses in their respective Compensation Acts. 2 Larson, Workmen’s Compensation Law, §§76.00-76.44 (a).
We do not reach the issue of the exclusionary effect of the Compensation Act upon a right of action of a shipowner under comparable circumstances without reliance upon an indemnity or service agreement of a stevedoring contractor. See Brown v. American-Hawaiian S. S. Co., 211 F. 2d 16,18; States S. S. Co. v. Rothschild International Stevedoring Co., 205 F. 2d 253; Slattery v. Marra Bros., 186 F. 2d 134 (N. J. statute); United States v. Rothschild International Stevedoring Co., 183 F. 2d 181; American Mutual Liability Ins. Co. v. Matthews, 182 F. 2d 322; American District Telegraph Co. v. Kittleson, 179 F. 2d 946; McFall v. Compagnie Maritime Beige, 304 N. Y. 314, 107 N. E. 2d 463. And see generally, Weinstock, The Employer’s Duty to Indemnify Shipowners for Damages Recovered by Harbor Workers, 103 U. of Pa. L. Rev. 321 (1954).
See Brown v. American-Hawaiian S. S. Co., supra; Crawford v. Pope & Talbot, supra; McFall v. Compagnie Maritime Beige, supra; Weinstock, The Employer’s Duty to Indemnify Shipowners for Damages Recovered by Harbor Workers, supra.
See Union Stock Yards Co. v. Chicago, B. & Q. R. Co., 196 U. S. 217; Brown v. American-Hawaiian S. S. Co., supra; Crawford v. Pope & Talbot, supra, at 792-793; American Mutual Liability Ins. Co. v. Matthews, supra, at 323-325; Rich v. United States, supra; Bethlehem Shipbuilding Corp. v. Gutradt Co., supra; Mowbray v. Merryweather, supra; Dunn v. Uvalde Asphalt Paving Co., 175 N. Y. 214, 67 N. E. 439.
See Berti v. Compagnie de Navigation Cyprien Fabre, 213 F. 2d 397; Hastorf Contracting Co. v. Ocean Transportation Corp., 4 F. 2d 583, aff’d, 4 F. 2d 584; Mowbray v. Merryweather, supra; Boston Woven Hose Co. v. Kendall, 178 Mass. 232, 59 N. E. 657.
Dissenting Opinion
dissenting.
The petitioner, Ryan Stevedoring Company, is an employer subject to the Longshoremen’s and Harbor Workers’ Compensation Act.
Palazzolo, an employee of Ryan, the stevedore, was injured while unloading cargo on a ship owned by the respondent, Pan-Atlantic Steamship Corporation. As authorized by § 33 Palazzolo elected to sue the shipowner rather than accept a compensation award. In his com
The stevedore’s employees loaded the rolls of pulp in Georgetown, South Carolina, and four or five days later different employees of the same stevedore unloaded them in New York. This was pursuant to a general contract under which Ryan had agreed to perform the shipowner’s stevedoring services along the Atlantic and Gulf coasts. The terms of the contract were set out in written memorandums prepared by the shipowner and agreed to by the stevedore. These memorandums contained a simple agreement to do the stevedoring for an agreed compensation plus, in some circumstances, cost of the stevedore’s insurance. There was nothing further from which it could possibly be inferred that Ryan would be under a duty to indemnify the shipowner for losses resulting from any negligent stowage by Ryan’s employees. To prevent injuries to cargo, crew and longshoremen, it
These issues were properly submitted to the jury by the judge in his charge. He told the jury that it could not find the ship unseaworthy on account of the way in which the goods were unloaded in New York. The issue thus revolved around stowage in South Carolina which was actively supervised by the ship’s officers. The court submitted to the jury the questions, among others, as to whether the ship had available for use proper equipment to stow these dangerous rolls and whether the ship’s officers were guilty of negligent loading and stowage in South Carolina. The jury gave Palazzolo a verdict for $75,000. The trial judge found in deciding the shipowner’s indemnity claim against the stevedore that the ship’s officer present at the stowage “did not properly perform his admitted duty to supervise the safe and careful loading of the vessel,” although he had “authority to remedy the condition or halt the work.” Ill F. Supp. 505, 507. He concluded from this and other findings
The Court of Appeals held that there was adequate evidence to support the jury’s finding that the shipowner was negligent and that the ship was unseaworthy because of the defectively stowed rolls. That court nevertheless held that the stevedore had to reimburse the shipowner for its loss despite the findings of the jury and the trial court that the loss occurred because of the shipowner’s
I have set out the evidence in some detail because I think it shows almost beyond doubt that this stevedoring company is being required to pay a $75,000 verdict “on account of” injuries to an employee received in the line of that employee’s duties. This is at least $60,000 more than it would have to pay under the Longshoremen’s
I agree, of course, that if the employer here had made a contract, oral or written, agreeing to hold this shipowner harmless or to indemnify the shipowner against liability for injuries to petitioner’s employees caused by the shipowner’s negligence in whole or in part, the contract would have been valid and indemnity could have been obtained. For the Longshoremen’s Act does not forbid employers under it to make independent agreements to indemnify others. But I think there is not the slightest support in this record for a finding that any such contract was made. No such allegation was made in the shipowner’s complaint. And the shipowner’s counsel was careful to stipulate during the course of the trial that his action was not based on a contract but on common-law indemnity.
A genuine contract as distinguished from a liability imposed by law, sometimes called a “quasi-contract,” requires mutual agreement of the parties. It is for this reason that the courts have frequently said that the cardinal rule in the interpretation of contracts is that the intention of the parties should be ascertained and enforced.
I think there is not a shred of evidence to support the Court’s inference that this stevedore voluntarily agreed to give up the limited liability which the Longshoremen’s Act was deliberately designed to afford. The Court finds nothing to support such a conclusion except that the stevedore agreed to do a stevedoring job. From that the Court implies that it was to do a good workmanlike job. From there it takes the next step — which should be more difficult than it appears to be — and says that the steve-doring company also agreed to give up its immunity under the Act and pay any judgments that might be rendered in favor of the stevedore’s employees against the shipowner for its negligence. The precise scope of the indemnity which the Court finds the stevedore intended to assume is left in doubt. Are we to assume that the stevedore agreed to an unlimited liability for indemnity without regard to the comparative or qualitative proportions of negligence as between its employees and the employees of the shipowner? Are we even to assume that the stevedore deliberately and intentionally agreed to indemnify the shipowner upon a court’s finding that the stevedore’s negligence was the “sole,” “primary,” or “active” cause of injury? Findings of fact based on these standards are never easy. And in efforts to formulate a common-law indemnity remedy courts themselves have groped considerably in trying to give meaning to the terms “primary” and “active.” Is an understanding of the different nuances of “sole,” “primary” and “active” to be attributed to stevedoring companies in judicial rewriting of
Finally, the Court’s action here not only deprives the employer of his limited liability, it makes the right of employees to recover damages from third parties a barren promise. Section 33 of the Act provides two ways for an injured employee to obtain damages from a negligent third person: (1) The employee may elect to waive statutory compensation from his employer and sue the negligent third person directly for damages. (2) If the employee accepts a compensation award the employer may sue the third person as statutory assignee of the employee’s claim, but all the employer recovers in excess of the amount of the compensation award must be paid over to the employee. Palazzolo was able to make an election and bring his own suit because his employer was financially interested in the outcome of his case and therefore advanced money to Palazzolo to sustain him during his injury until his case against the third party could be tried. The Court takes away all incentive for employers to follow this course in the future. Hereafter stevedoring companies under circumstances like this will
There has been considerable disagreement in this Court and among other courts about three of our recent holdings, Seas Skipping Co. v. Sieracki, 328 U. S. 85; Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U. S. 282; and Pope & Talbot, Inc. v. Hawn, 346 U. S. 406. In each of these cases a worker in the same position as Palazzolo sued a shipowner alleging negligence and unseaworthiness. Judgments were obtained against the shipowners. We held in the Halcyon case that the shipowner could not under the common-law doctrine of “contribution” force injured employees’ employers to pay part of the judgment against the shipowner. The Sieracki and Halcyon cases were reaffirmed in Pope & Talbot. In that case we refused to permit a shipowner to shift part of his loss to the injured person’s employer on his argument that the employer, who was under the Longshoremen’s Act, negligently contributed to the injury. We rejected the contention on the ground that if accepted it “would frustrate this [Act’s] purpose to protect employers who are subjected to absolute liability by the Act.” 346 U. S., at 412. The Court’s opinion today provides a way under which by simple change of words and remedial formulas the results reached in our three former cases can be undermined. Employees like Sieracki and Palazzolo will find it practically impossible to get their cases for injuries against third persons tried in a court. And a shipowner who wants to shift liability wholly to a stevedoring company can do so by a very simple method. He can allege that the stevedoring company intentionally made a contract agreeing to indemnify him under circumstances like those in this case; that allegation will be automatically proved by simply establishing the fact that
I would reverse this case.
44 Stat. 1424, as amended, 33 U. S. C. § 901.
The trial court also found that the ship’s officer “in the exercise of reasonable care should have discovered and corrected” the defective stowage conditions. Had this been the only ship’s negligence found it might be material in considering the question of common-law indemnity. But this Court relies on contractual indemnity.
Even though the question of unseaworthiness was also submitted to the jury, it depended wholly upon whether there was negligent stowage. Under the undisputed testimony of the ship’s officer the jury and judge had to find that the shipowner was guilty of negligence if the stevedore was. Moreover, if the shipowner failed to provide the proper gear in the way of chocks or lumber, the shipowner was guilty of negligence whether the stevedore was or not. In this case, therefore, the shipowner’s negligence and unseaworthiness were one and the same thing. And if the shipowner failed to supply needed gear in the way of chocks or lumber, it would have been permissible to find that this was the “sole” cause of Palazzolo’s injuries.
See Crowell v. Benson, 285 U. S. 22, 37-42; New York Central R. Co. v. White, 243 U. S. 188, 201-202. Cf. Ives v. South Buffalo R. Co., 201 N. Y. 271, 94 N. E. 431.
“Mr. Behrens [counsel for shipowner]: This right of indemnity alleged by Pan-Atlantic is a right of common-law indemnity rather than a contractual provision. My question is how to get such facts before your Honor.
“Your Honor, there was a motion for summary judgment in this case by Ryan, to which was annexed the exchange of correspondence between Ryan and Pan-Atlantic, which is a contract.
“Now, the question is whether those documents should now be put in evidence before your Honor, or whether your Honor will infer from the absence of any proof on the subject that there was no contractual indemnity.
“Mr. Schwartz [counsel for Ryan] : I think we can agree and stip
“Mr. Behrens: That is correct.
“Mr. Schwartz: I will stipulate that there is no contractual provision for indemnity.
“Mr. Behrens: And I will so stipulate, if that is satisfactory to your Honor.
“The Court: Very well.”
See, e. g., Mauran v. Bullus, 16 Pet. 528, 534; Canal Co. v. Hill, 15 Wall. 94, 99-100.
See, e. g., cases collected in Note, 175 A. L. R. 8, 29-32.
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