MONONGAHELA RIVER CONSOL. COAL & COKE CO. et al. v. HURST et al., 200 F. 711

KNAPPEN, Circuit Judge (after stating the facts as above).

Section 4283 of the Revised Statutes (Act March 3, 1851, c. 43, 9 Stat. 635 [U. S. Comp. St. 1901, p. 2943]), provides that: “The liability of the owner of any vessel, for any embezzlement, loss, or destruction, by any person, of any property, goods or merchandise, shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing lost, damage, or forfeiture, done, occasioned or incurred, without the privity, or knowledge of such owner or owners, shall in no ease exceed the amount or value of the interest of such owner in such vessel; and her freight then pending.” The effect of

section 4284 (U. S. Comp. St. 1901, p. 2943) is to provide a general average of loss in case the value of the vessel and freight is insufficient to make full compensation to all sustaining loss. Butler v. Boston, etc., S. S. Co., 130 U. S. 527, 551, 9 Sup. Ct. 612, 32 L. Ed. 1017. Under

section 4286 (U. S. Comp. St. 1901, p. 2944) a charterer is given the benefit of the statute in case he mans, victuals, and navigates the vessel at his own expense or by his own procurement (Thorp v. Hammond, 12 Wall. 408, 416, 20 L. Ed. 419); the owner retaining the benefit of the statute notwithstanding such chartering (Quinlan v. Pew [C. C. A. 1] 56 Fed. 111, 119, 5 C. C. A. 438). The effect of the statute is to leave the owner and charterer liable without limit for their own negligence, and liable only to the extent of their interest in the vessel and freight for the negligence of the master and crew.

Liverpool, etc., Steam Co. v. Phenix Ins. Co., 129 U. S. 397, 440. 9 Sup. Ct. 469, 32 L. Ed. 788; Great Rakes Towing Co. v. Mill Transportation Co. (C. C. A. 6) 155 Fed. 11, 18-19, 83 C. C. A. 607, 22 L. R. A. (N. S.) 769. The statute applies to death claims (Butler v. Steamship Co., supra), and, by express amendment of 1886, to vessels used on navigable rivers (Rev. St. § 4289 [U. S. Comp. St. 1901, p. 2945]); In re Garnett, 141 U. S. 1, 14-15, 11 Sup. Ct. 840, 35 L. Ed. 631). Under admiralty rules Nos. 54 to 58 (29 Sup.

Ct. xlv, xlvi), the benefit of the statute can be had under libel filed by the owner in a District Court, appraisement of such owner’s interest in tlie vessel and pending freight, and tlie bringing of the amount oí such appraisal into court, by either (

a) actual payment into court; or (

b) giving stipulation for such payment when ordered; or (

c) the transfer by libelant of his interest in the vessel and freight to a trustee appointed by the court, as provided by

section 4285 (U. S. Comp. St. 1901, p. 2944). The proceeding to limit liability will not affect the status of the appellees’ decrees in the collision suits. Those decrees are final adjudications, both as to liability and amount of damages. Norwich Co. v. Wright, 13 Wall. 104, 122, 20 L. Ed. 585; The Benefactor, 103 U. S. 239, 26 L. Ed. 351; The Scotland, 105 U. S. 24, 36, 26 L. Ed. 1001; Providence, etc., S. S. Co. v. Hill Mfg. Co., 109 U. S. 578, 3 Sup. Ct. 379, 617, 27 L. Ed. 1038; Gleason v. Duffy (C. C. A. 7) 116 Fed. 301, 54 C. C. A. 100.

But if appellants’ liability shall be limited, only a small portion of appellees’ decrees can in fact be paid. It is clear that appellants’ action in respect to their exceptions • to the libels in collision was not a waiver of the. befiefit of the statute. As to the second exception, it is enough to say that the Harter Act concerns only the relations between the vessel and her cargo, and so has no application here. The Delaware, 161 U. S. 459, 470, 16 Sup. Ct. 516, 40 L. Ed. 771.

As to the first exception: While it is true that appellants had the right to take the benefit of the limitation of liability directly in the collision suits (The Scotland, supra, 105 U. S. 31, 26 L. Ed. 1001; The Great Western, 118 U. S. 520, 525, 526, 6 Sup. Ct. 1172, 30 L. Ed. 156), they were not bound to do so. They had the right to first .congest liability for the collision in any court, state or federal, in which action therefor might be brought, including the .appellate court of last resort, without raising the question of limitation, and without thereby waiving the right to take the benefit of the statute.

The Benefactor, supra, 103 U. S. 244, 26 L. Ed. 351; The City of Norwich, 118 U. S. 468, 489, 6 Sup. Ct. 1150, 30 L. Ed. 134; The San Pedro, 223 U. S. 365, 372, 32 Sup. Ct. 275, 56 L. Ed. 473; Gleason v. Duffy, supra, 116 Fed. 298, 301, 54 C. C. A. 100. The first exception did not amount to a claim of the benefit of the statute. It did not allege lack of personal fault on the part of vessel owner or charterer. It was addressed only to the sufficiency of the pleading. It was properly overruled, and the assignment of error thereon was without merit.

The giving of time to appellants to take steps to get the benefit of the statute was permissive only. The court could not have required, and did not attempt to require, appellants to take advantage of such permission at the peril of losing the right of limitation. The question, however, of the effect of giving the supersedeas bond presents more difficulty. While the mere appeal to this court from the decision in the collision suit was not a waiver of the limitation statute, yet the bond was not necessary to such appeal, but only to effect a stay of proceedings pending appeal. Rev. Stat. §§ 1000 and 1007 Sup. Ct.

Rule No. 29 (3 Sup. Ct. xvi); Stafford v. Union Bank, 16 How. 135, 139, 14 L. Ed. 876; Sage v. Railroad Co., 93 U. S. 412, 417, 23 L. Ed. 933; Goddard v. Ordway, 94 U. S. 672, 24 L. Ed. 237; Ex parte French, 100 U. S. 1, 4, 25 L. Ed. 529. Had the supersedeas not been taken, appellees could, notwithstanding the appeal, have taken out execution upon the decrees against the real and personal property of appellants. Admiralty Rule No. 21 (29 Sup. Ct. xli)_; Ward v. Chamberlain, 2 Black, 430, 17 L. Ed. 319.

In such event, in order to effectually preserve the right to limitation, appellants would have been compelled, as a practical proposition, at once to assert their rights under the limitation statute. And, without so doing, they were enabled, by giving the supersedeas bond, to retain the possession and beneficial use of the vessel pending appeal. The contention that they thereby elected to substitute the responsibility of the surety on the supersedeas bond for the security of the vessel and its freight, and so waived the benefit of the limitation statute, is plausible.

But does this view give full ellect to the language of the statute and to its intention as construed by the courts? We are constrained to believe it does not. The purpose of the statute was to encourage shipbuilding and to bring our system of admiralty, in respect to personal liability, into harmony with the general maritime law of modern Europe. Norwich Co. v. Wright, 13 Wall. 104, 116, 20 L. Ed. 585; Butler v. S. S. Co., supra; The City of Norwich, 118 U. S. 468, 490, 6 Sup. Ct. 1150, 1155 (30 L. Ed. 134).

It expressly declares that: “Tile liability of the owner of any vessel * * * for any * * * thing * * * done without the privity, or knowledge of such owner or owners shall in no case exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.” The construction of this statute has been uniformly liberal. In the case of The Benefactor, Justice Bradley said (103 U. S. 244, 26 L.

Ed. 351): “But since the statute is imperative that where a loss occurs in a vessel, by embezzlement or by collision or other thing, without the privity or knowledge of the owner, his liability ‘shall in no case exceed the amount or value of his interest in the vessel and her freight then xiending,’ it would be a ■íyuesíionable exercise, by this court, of its power to regulate the proceedings, if, by such regulation, it should prevent a party from having the benefit of the law unless he took initiatory steps for that purpose before it appeared that he was liable at all.” (Italics ours.) And again (103 U.

S. 245, 26 L. Ed. 351): “Precisely when the owners of a ship in fault ought to be regarded as precluded from instituting proceedings for a limitation of liability might be difficult to state in a categorical manner. Perhaps they can never be precluded so long as any damage or loss remains unpaid.” In The City of Norwich, 118 U. S. 468, 502, 6 Sup. Ct. 1150, 30 L.

Ed. 134, it was held that the limitation of liability is applicable to proceedings in rem against the ship as well as to proceedings in personam against the owner; that the limitation extends to the owner’s property, as well as to his person; that the right to proceed for limitation of liability is not lost or waived by a surrender of the ship to the underwriters; and that the owner may retain his insurance notwithstanding the proceeding for limitation.

In that case Justice Bradley speaks of— “tlie absolute declaration of the statute that his [the owner’s] liability shall not exceed the amount or value of the ship and freight.” In Hughes on Admiralty, § 172, it is said: “The owner may take advantage of the statute at any time before he is actually compelled to pay the money.

Under the American practice he may contest his liability for any damages at all, fight that through all the courts, and, if Anally defeated, take advantage of the statute.” In Benedict on Admiralty (4th Ed.) § 520, the author says: “There seems to be no limit of time, the expiration of which will cut off the owner of the vessel from taking advantage of the provisions of the statute. * * * He may wait .until he is sued, and defend the case, and appeal from an adverse verdict, and, after affirmance by the appellate court, still Ale his libel for limitation of his liability.” The Supreme Court has not passed upon the question whether the giving of a supersedeas bond on appeal, in an action in personam, is a waiver of the limited liability statute.

The Circuit Court of Appeals for the Seventh Circuit, in the case of Gleason v. Duffy, supra, has answered the question in the negative. In that case the action for damages was in a state court, and was appealed to the Supreme Court of the state. In that case, as in this, a supersedeas bond was given on the appeal. There, also, the bond was not essential to appeal, but was necessary only to stay proceedings pending appeal. Burns’ Ann. St. Ind..l908, §§ 679-683; Mitchell v. Gregory, 94 Ind. 363, 365.

The court (in the Gleason Case) said: “Tbe appeal taken by tbe owners in tbe state court was properly resorted to in contestation of their liability, and to correct any supposed errors of the trial court. They bad legal right to do that, and should be no more concluded by the exercise of that right than by the defense of the ease in the trial court. The bond which they gave upon appeal was one which the law required them to give in order that they might properly and safely present their contention to the appellate court.

We do not think that that should preclude them from asserting their rights under the statutes of the United States.” (Italics oúrs.) The decision in Cook v. Smith (C. C. A. 3) 187 Fed. 538, 109 C. C. A. 304, which is relied upon by appellees, rested upon peculiar facts, and is not, w.e think, in conflict with the Gleason Case. It was the evident purpose of the limitation statute to make the liability of an owner or charterer, when not personally in fault, precisely the same, whether suit is brought in personam or in rem.

The view that the giving of the supersedeas bond, and the consequent stay of execution necessary to the complete preservation of appellants’ rights pending appeal, did not constitute a waiver of the then existing right to limit liability, if and when such liability should, be established, is, we think, more consonant with the language and spirit of the statute, and more in harmony with the decisions thereunder, than is the contrary view. The record does not indicate that appellants intended to abandon the benefit of the statute, should occasion arise for invoking it.

The only substantial advantage which appellants gained through the supersedeas was a postponement of the time when resort to the limitation statute must he had; and the only injury suf- ■ fered by appellees is through such delay as may have resulted in ultimately realizing the amount apportionable to their decrees. Had appellants prevailed on the appeal to this court in the collision süits, such resort might never have been necessary, and the right to such postponement of limitation proceedings until after the fixing of liability is. as has already been said, well settled.

Thus, through-the super-sedeas bond, appellants have practically preserved only the right which the statute was intended to give them, and a right which could have been preserved (without a surrender of the vessel) by giving (instead of a supersedeas bond) a stipulation under the limitation procedure for payment of the appraised value of vessels and freight into court when ordered.

We think it the better view that the obligation of the surety was only coextensive with that of the principal, that the liability incurred under the supersedeas bond was impliedly subject to the enforcement of the limited liability statute, and would be itself superseded, at least pro tanto, by -"’e decree limiting such liability. We see no merit in the proposition that the surety can be held to full liability, notwithstanding the discharge of the principal. Decisions based upon the express provisions of the bankruptcy act are not in point.

It follows from this view that the plea in bar to the petition to limit liability should not have been sustained. We think, however, that the District Court might properly, in view of the delay in instituting the limitation proceedings, require, as a condition of relief, the payment of the costs recovered by appellees in the collision suits, both in the District Court and in this court. Gleason v. Duffy, supra, 116 Fed. 303, 54 C. C. A. 100; Benedict's Admiralty (4th Ed.) § 520.

We also think a stipulation for the payment of interest on the value of the vessel, her tows and freight from the time when execution could (but for appeal) have issued upon the decrees below in the collision suits, might properly be required. The order of the District Court appealed from is reversed, with costs, and with directions to take proceedings not inconsistent with this opinion. To prevent possible embarrassment, the mandate in the collision suits will go down contemporaneously with the mandate in the instant suit. U. S. Comp. St. 1901, pp. 712, 714.