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The vessels named in this list belonging to the Mills Transportation Company were the Gogebic, the Newago, and the Checotah.
Upon the happening of the accident to the Newago, her captain forthwith telegraphed to his principal, the Mills Transportation Company, that the Newago was ashore on Devil's Island Shoal leaking badly, and asking that a wrecking outfit be sent. The Mills Transportation Company were aware of the contract of the appellant with McMorran, and on receipt of the telegram above mentioned communicated with McMorran, who was then at Washington, but had left subordinates in his office at Port Huron. Through these subordinates, the request for the assistance of a tug and other wrecking outfit was made to the appellant, which thereupon dispatched the Favorite and wrecking apparatus to the scene of the disaster; and the appellee notified the captain of the Newago by telegram that this had been done. On arrival the Favorite found the Newago difficult of access, being in a place of great danger. But the Favorite stood by and endeavored for several days to rescue the steamer. Its efforts were unsuccessful, and the Favorite was finally discharged from further service. The Newago was lost and only about $156 in value of her remnants were saved. Subsequently the appellant presented to the appellee a bill for the services thus rendered as follows:
Dec. 3. 1903.
ashore Devil's Island Shoal 10 days at $350.00 per day.... $3,500 00 To use 2-12" steam pumps 10 days each, 20 days at $50 per day.. 1,000 00
But the personal liability of the appellee for the bill was not admitted. We do not understand that the bill itself was objected to, but it was contended that there was no personal liability of the owner therefor, and that recourse was available only against the vessel of which the remnants above mentioned were the only parts in esse.
In this state of affairs the appellee filed its petition for the limitation of its liability. The remnants were appraised and a bond given by the petitioner for the sum of $250. The appellant appeared and filed its answer in opposition to the limitation prayed for in the petition, and its claim with a prayer for a decree for payment of the same. The court below held and decreed in favor of the petitioner that its liability be limited as prayed. Upon these facts we think the court below was in error.
By Act March 3, 1851, c. 43, 9 Stat. 635 (section 4283, Rev. St. [U. S. Comp. St. 1901, p. 2943]), it was enacted 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 case exceed the amount or value of the interest of such owner in such vessel, and her freight then pending."
And by section 18 of the act of June 26, 1884 (23 Stat. 57, c. 121 [U. S. Comp. St. 1901, p. 2945]), it was further enacted that:
“The individual liability of a ship-owner, shall be limited to the proportion of any or all debts and liabilities that his indvidual share of the vessel bears to the whole; and the aggregate liabilities of all the owners of a vessel on account of the same shall not exceed the value of such vessel and freight pending: Provided, that this provision shall not affect the liability of any owner incurred previous to the passage of this act, nor prevent any claimant from joining all the owners in one action; nor shall the same apply to wages due to persons employed by said ship owners."
In a number of cases it has been held, and we have no doubt correctly, that these two provisions, relating as they do to the same class of persons and to the same subject, should be regarded as reguiations in pari materia, and should be construed as parts of an entire scheme. We refer to this rule of construction of statutes in pari materia, because, as will be noticed, the words “done, occasioned or incurred, without the privity or knowledge of such owner or owners,” which are contained in the act of 1851 are not employed in the act of 1884; and from this circumstance counsel for the appellees argues it was intended by the use of the words “debts and liabilities” in the later act to mean all debts and liabilities incurred on account of the vessel, whether with or without the privity or knowledge of the owner; whereas, if the act of 1884 were put to follow the act of 1851, so as to further provide for the application of the provision of the act of 1851, to the case of each individual shareowner of the vessel, and then sum up by declaring that all the liabilities of the owners on account of the vessel shall not exceed the value of the vessel and pending freight, the result would be that the condition of privity or knowledge of the owner would be carried along into the subsequent section. Another reason for thinking that the eighteenth section of the act of 1884 was intended as an extension merely of the relief provided by the act of 1851 is found in the fact that the act of 1851 contains provisions for the procedure in applying the limitation. One of these is by paying into court the appraised value of the ship and pending freight, the other by surrendering the vessel and freight. The owner of the ship might adopt either of these. The Scotland, 105 U. S. 24, 26 L. Ed. 1001. These privileges are analogous to those which the owner has in ordinary seizures, when he may give bond and release the vessel, or he may suffer the vessel to be condemned and sold. But the act of 1884 provides no procedure for administering its provisions. And this, we think, furnishes an inference that the act of 1851 was regarded as the basic law, to which section 18 of the act of 1884 was intended to be supplementary. And the provision of this alternative mode of procedure suggests a query whether this legislation does not contemplate that the liability of the ship is to be presupposed, and such a liability would not exist in case the owner had personally contracted the debt, and had not stipulated for a lien, either expressly or by fair implication. The St. Jago de Cuba, 9 Wheat. 409, 6 L. Ed. 122 ; The Grapeshot, 9 Wall. 129, 136, 19 L. Ed. 651; The Valencia, 165 U. S. 264, 17 Sup. Ct. 323, 41 L. Ed. 710; The Havana, 35 C. C. A. 148, 92 Fed. 1007. But we think there are other reasons of sufficient weight to lead to the
conclusion that the act of 1884 was not intended to have application to liabilities of the owners of vessels for the consequences of their personal faults or of obligations personally contracted by them. The purpose of Congress, was, as we think, to relieve the shipowner from the consequences of those extraordinary risks which were imposed without limitation by the law of the admiralty as that law had been interpreted in this country. And by extraordinary risks we mean those risks arising from the conduct of, and contracts made by, those who are beyond the personal supervision and control of the owner and yet have legal authority to bind him to answer for their conduct or contracts; or, to express the thought in another way, that the liabilities intended by this legislation were those peculiar to him as a shipowner and had been imputed to him because of his relation to the ship, and not those liabilities, whether for torts or from contracts, which spring from his own personal conduct or stipulations. It seems to us altogether unlikely that Congress intended to qualify the power of an owner to make contracts in relation to his ship which by the universal law would be valid if made about any thing else and would be enforced in the courts in common-law actions. It would be an anomaly that a party competent to do business should be unable to make a valid contract about his own affairs, or be given such an immunity as to make his stipulations of uncertain value. Such a doctrine would be inconvenient in the last degree to the owners of vessels and the interests of commerce. If in every case the party who should undertake to render assistance to other vessels on request of the owner should be dependent on the proceeds of the vessel for his compensation, he would be likely to consider the chances, and the sorer the need of the services the less likely would the owner be to secure them. Instead of relieving him of a burden, he would be burdened with the disability of pledging his personal credit for the securing of the needed assistance. Besides, the history of the law upon this subject furnishes an argument in favor of the construction we think should be put upon the statute. It is succinctly stated by Mr. Justice Bradley in Butler v. Boston Steamship Co., 130 U. S. 527, 9 Sup. Ct. 612, 32 L. Ed. 1017. From an early period the maritime law of the commercial nations of the continent of Europe had accorded to the owners of ships this limitation of liability to the value of the ship and freight earned; but this limitation was not allowed when the liability was incurred with the privity or knowledge of the owner. The maritime law of the continent was not accepted by the English courts, and was rejected by the courts of this country. The acts of 1851 and 1884 have established in the United States the rules of the general maritime law upon this subject, and in almost the identical language in which those rules have been expressed in the Codes and text-books of the countries in which the general law had been embodied. As Mr. Justice Bradley said, in reference to the divergence in this country from the general maritime law, and the return thereto by the enactment of the statutes here for the relief of shipowners, “We have rectified that.” And we are convinced that the general understanding of the courts of this country is that the statutes here enacted have restored the old rule for the like occasions, namely, when the liability of the owner has occurred without his own
participation in the cause or creation of the liability. The suggestion of Mr. Justice Bradley in Butler v. Boston & Savannah Steamship Co., although not necessary to the decision of that case, seems to have been generally adopted as indicating the proper construction. Indeed, prior to that decision, the statutes, including that of 1884, had received that construction by Judge Brown in the Southern District of New York in the Amos D. Carver (D. C.) 35 Fed. 665, Force v. Providence Ins. Co. (D. C.) 35 Fed. 767, and Miller v. O'Brien (D. C.) 35 Fed. 779. And in later decisions that learned and distinguished judge maintained the doctrine he had previously declared. Laverty v. Clausen (D. C.) 40 Fed. 542; Gokey v. Fort (D. C.) 44 Fed. 364; Douse v. Sargent (D. C.) 48 Fed. 695. It was also approved by Judge Nelson in the district of Massachusetts in McPhail v. Williams (D. C.) 41 Fed. 61, and in Whitcomb v. Emerson (D. C.) 50 Fed. 128, and by Judge Webb in the district of Maine in the Giles Loring (D. C.) 48 Fed. 463.
In the case of Whitcomb v. Emerson, supra, and in Warner v. Boyer (D. C.) 74 Fed. 873, decided by Judge Butler, the statute of 1884 was held to relieve part owners from the consequences of contracts made by other part owners; and this upon the ground that shares are separately owned and so dealt with by the statute, and hence the nonparticipating owners were entitled to be relieved in respect of their shares. This is in entire accordance with the rule. Judge Butler in deciding the case last cited seems to have entertained the view that the acts of 1851 and 1884 were to be construed independently and not as in pari materia, but his actual decision was notwithstanding rested upon a principle which we regard as sound.
In the Circuit Courts of Appeals a like interpretation has been given to these statutes. In the case of The Republic, 61 Fed. 109, 9 C. C. A. 386, it was held by the Court of Appeals for the Second Circuit that the shipowner was not entitled to the limitation in respect of a loss which arose from the defective condition of his ship of which he was ignorant because of his own negligent examination of the vessel. The court said by Judge Wallace, referring to the eighteenth section of the act of 1884, “The section does not purport to repeal any pre-existing law, but is legislation in pari materia with the act of 1851" —and adopts the construction of Judge Brown in the cases above cited. This was a case of the negligent performance of a duty, and not a willful act of the owner. It would certainly be incongruous with this decision to hold the shipowner entitled to relief against his own contract. In the case of The Faxon, 75 Fed. 312, 21 C. C. A. 366 (the Circuit Court of Appeals for the Ninth Circuit), the limitation sought was for a loss occasioned by the explosion of the boiler of the vessel. The court recognized the distinction which had been made in previous cases between liabilities arising from causes within the knowledge or privity of the owner and those which are imputed to him because of his relation to the ship, but held that the owner was in that case entitled to the limitation for the reasons that the defect in the boiler was not one apparent to the owner, that it had been inspected by the government inspectors and repaired in accordance with their directions by a skilled marine engineer. The court was of opinion that the owner
had discharged his duty in respect of the condition of his vessel, and that, therefore, there was on his part no pesonal fault.
Another case in which this question was involved and which is much relied on by the appellee is Gilchrist v. Chicago Ins. Co., 104 Fed. 566, 44 C. Č. A. 43, a case decided by the Circuit Court of Appeals for the Seventh Circuit, the opinion being by Mr. Justice Harlan. But an analysis of the opinion shows that it was decided upon the same construction of the statute of 1881 as had been made in the earlier cases. The vessel was stranded in Lake Huron on May 6, 1894. Underwriters had issued policies of insurance on the vessel which contained a provision that, “in case of loss or misfortune, the insured should give prompt notice to the insurer of the disaster and among other things make all reasonable exertions in and about the defense, safeguard and recovery of said vessel,” and stipulated that the underwriters would contribute to the expenses. On the occurrence of the accident the master of the vessel summoned the libelant who went with tugs and wrecking apparatus to the rescue of the vessel, and finally, on May 18th, got her afloat; but on the next day she went down in a storm, only some remnants being saved. Thereupon the owner abandoned the vessel to the insurers as a total loss. While the libelant was engaged in rescuing the vessel an agent of the underwriters was sent to assist in the work. He remained some days, giving directions and approving what the master had done. A libel in personam having been filed by the owner of the wrecking outfit against the owner of the vessel and the underwriters, defense was made by the underwriters that they had never employed the libelant, and were not responsible for his services. They also severallly filed petitions for the limitation of their liability. Some of the facts here stated more fully appear from the report of the case in the court below. Gilchrist v. Godman (D. C.) 79 Fed. 970. Upon these facts the Court of Appeals held that at the time when the services were rendered the underwriters were the owners of the vessel, but solely because of the retroactive effect of the subsequent abandonment, which related back to the time of the disaster and vested the ownership in them as of that date, and that each of them was to be charged ratably with the payment of the libelant's claim; but that they were severally entitled to the benefit of the limitation of the act of 1884. The reason for this is thus stated in the opinion (page 573 of 104 Fed., and page 50 of 44 C. C. A.):
"The liability of the underwriters in the present case arises, not from any personal contract by them with the libelants, but from the rule of law which in the case of a valid abandonment, makes the insurer the owner of the vessel from the time of the original disaster."
It is evident that the learned justice recognized that the consequence would have been otherwise, if the underwriters, had made a personal contract. This inference is confirmed by his further statement that:
“The fact that the libelants might have looked to her [one of the defendants] as the original owner upon her personal contract made with them through her agent does not relieve the underwriters from the liability arising out of their becoming the owners of the entire property from the date of the disaster.”