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AMERICAN MUT. LIAB. INS. CO. v. MATTHEWS

December 20, 1949

AMERICAN MUT. LIABILITY INS. CO.
v.
MATTHEWS et al.



The opinion of the court was delivered by: BYERS

In this personam cause contribution is sought by the underwriter of the owner of the S.S. Tiradentes from the respondents stevedores for one-half of the sum paid in satisfaction of a judgment recovered by an employee of the respondents in a civil action against the owner of the ship for personal injuries suffered by the said employee while working on the ship which was afloat, plus one-half of the costs and expenses involved.

That civil action was in a state court, and the defendant therein (libellant in effect here) gave timely vouching in notice to these respondents whereby they were requested to 'take over the defense of the said pending action * * * and * * * indemnify and save harmless' the owner of the ship from any and all demands, judgments, costs and expenses in connection with said action.

 The respondents (hereinafter to be referred to in the singular) ignored the notice; the case went to trial, and resulted in judgment as has been stated. The verdict established that the employee was injured as the result of the breaking of a rope, part of the ship's tackle, which was used by the stevedore in handling cargo aboard the ship; specifically, that the rope was in faulty condition on the 8th day of May, 1944, when such operations began, and that the fault was then apparent and would have been disclosed upon reasonable inspection, although the accident did not occur until May 26, 1944.

 The question for decision is whether the stevedore can be held liable for contribution upon the theory that, since the fault was apparent, the duty to discover it rested as well upon the stevedore as the ship, and for failure to discharge that duty, it must reimburse the ship (i.e., its underwriter) to the extent now asserted.

 The facts are undisputed, the evidence being documentary only, which dispenses with the necessity for findings, since only a question of law is presented.

 The injured man brought his lawsuit against the owner of the ship instead of taking compensation under Section 903 of the Longshoremen's and Harbor Workers' Compensation Act, Title 33 U.S.C.A. § 901 et seq., and it is argued that the stevedore employer may assert immunity from the recovery here sought because Section 905 of the Act provides that the statutory liability of the employer is exclusive and in place of all other liability to ' * * * anyone otherwise entitled to recover damages from such employer * * * on account of such injury'.

 The point is somewhat troublesome, for while contribution among tort-feasors is said to have existed since 1875 in the admiralty, Barbarino v. Stanhope S.S. Co., 2 Cir., 151 F.2d 553, and as a substantive right, The Ira M. Hedges, 1910, 218 U.S. 264, 31 S. Ct. 17, 54 L. Ed. 1039, 20 Ann.Cas. 1235, this statute was enacted in 1927, and the scope of the exculpatory language in respect of contribution has not been defined in this Circuit; see Porello v. United States et al., 2 Cir., 153 F.2d 605, at page 609 (Petition for rehearing). That case seems to have turned upon the meaning of a contract of indemnity (See, American Stevedores, Inc. v. Porello, 330 U.S. 446, at page 456 et seq., 67 S. Ct. 847, 91 L. Ed. 1011).

 There is an apparent anomaly involved in the concept of freedom of the stevedore from tort liability to his employee, and a coexisting liability to his accomplice in the commission of the tort, to respond to the latter for contribution to the damages occasioned by their joint behavior.

 Perhaps the subject is not squarely presented by this record, since the stevedore has been responded in damages to his employee, thereby discharging the liability which Section 905 declares to be exclusive.

 If the respondent's argument is understood, it is that the creation of the primary duty to pay compensation is to be thought of as dissolving or removing the responsibility for contribution which otherwise would be present, notwithstanding the failure of the injured man to seek or receive that compensation.

 Several District Court decisions, cited by libellant, are to the effect that the right to contribution among tort-feasors persists in spite of the provisions of the Longshoremen's Act: The Tampico, 45 F.Supp. 174; The S.S. Samovar, 72 F.Supp. 574, at page 588; Coal Operators Cas. Co. v. United States et al., 76 F.Supp. 681; Rederii v. Jarka Corporation, 82 F.Supp. 285; Portel v. United States et al., 85 F.Supp. 458.

 The decisions in The Chattahoochee, 173 U.S. 540, 19 S. Ct. 491, 43 L. Ed. 801, and Aktieselskabet Cuzco v. The Sucarseco et al., 294 U.S. 394, 55 S. Ct. 467, 79 L. Ed. 942, are cited in some of the above cases; while other statutes were before the Supreme Court in these two instances, a parity of the reasoning adopted assists in determining the apparent scope of Section 905 of this Act as applied to the claim which this libellant seeks to enforce.

 The right to contribution, as recognized in the admiralty, arises directly from the tort, and is not dependent upon any theory of subrogation to the claim of the injured man against his employer.

 Those decisions will be followed here with deference to the reservation announced by the Court of Appeals for this Circuit in disposing of the petition for rehearing in the Porello case, supra.

 This means that the libellant is not foreclosed of its right to seek contribution from the stevedore by reason of the provisions of Section 905 of the Longshoremen's etc. Compensation Act.

 Turning now to the question of how far the respondent is concluded by the litigation in the State court, it is necessary to pass upon the following questions:

 A. The efficacy, as a matter of form, of the vouching in notice.

 The argument for the stevedore is that the notice was of no effect since it called upon the latter to take over the defense of the action on behalf of the ship owner, and that 'you (these respondents) indemnify and save harmless the undersigned from any and all demands, judgments, costs and expenses in connection with the said pending action and the defense thereof.'

 It is urged that the stevedore is here sued as a joint tort-feasor, and not as an indemnitor, and that under the substantive common law of New York, the right to contribution did not exist, and so the notice must be deemed a nullity.

 If the common law controlled, this reasoning would be formidable; however, the law of New York is that as to maritime torts the courts of the State 'look to the decisions of the Federal courts to define the liabilities of ship owners' (Riley v. Agwilines, Inc., 296 N.Y. 402, 73 N.E.2d 718, 719) in deference to Robins Dry Dock and Repair Company v. Dahl, 266 U.S. 449, 45 S. Ct. 157, 69 L. Ed. 372.

 It results therefore that the vouching in notice would have been effectual as to the right to contribution between tort-feasors according to the principles of maritime law which the State court would have been required to enforce, unless it be regarded as defective in form for employing the word 'indemnify'.

 The right to indemnification arises from the violation of a primary duty, Standard Oil Co. v. Robins Dry Dock & Repair Co., 2 Cir., 32 F.2d 182, at page 184, and the right to contribution from a joint tort-feasor is also primary in that it arises from the tort, as has been stated above. A discussion of this subject will be found in George's Radio, Inc., v. Capital Transit Co., 75 U.S.App.D.C. 187, 126 F.2d 219, at second column on page 222.

 The rights of these parties should not be made to turn upon a mere matter of form unless it appears that, because of the language chosen by the one giving the notice, the other can be seen to have refrained from acting, to its own detriment. In other words, whether the stevedore can be thought to have ignored the notice to indemnify the ship owner for the latter's conduct, while it might ...


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