Before FRIENDLY, SMITH and MARSHALL, Circuit Judges.
These appeals from a decree in admiralty by Judge Levet in the Southern District of New York relate to a collision twenty years ago, on April 20, 1943, between the Luckenbach vessel Lena Luckenbach and the James Fenimore Cooper, owned and operated by the United States, while the two ships were in convoy on the North Atlantic. The Lena was transporting consumable goods consigned to the British Government under the Lend-Lease (Defense Aid) Act of March 11, 1941, 22 U.S.C., Supp. III, §§ 411-419, and the Master Lend-Lease Agreement between the United States and the United Kingdom signed on February 23, 1942, Executive Agreement Series 241. The bills of lading included a "Both-to-Blame" clause; this provided, in effect, that if the Lena collided with another vessel, both being to blame, and the Lena's cargo recovered against the noncarrying vessel which in turn recouped a part of this recovery from Luckenbach, the cargo would reimburse Luckenbach for any cargo damage liability thus borne by the latter. The Supreme Court's invalidation of such a clause as an unwarranted extension of the carrier's immunity, under § 4(2) of the Carriage of Goods by Sea Act, 46 U.S.C. § 1304(2), from direct liability to his own cargo for damages resulting from faulty navigation, United States v. Atlantic Mutual Ins. Co. (Esso Belgium-Nathaniel Bacon), 343 U.S. 236, 72 S. Ct. 666, 96 L. Ed. 907 (1952), post-dated the instant collision by nearly a decade.
In July, 1943, Luckenbach filed against the United States under the Suits in Admiralty Act, 46 U.S.C. §§ 742-752, a libel "as owner of steamship Lena Luckenbach and on behalf of any others interested in said vessel, her use and operation and as bailee of her cargo and in behalf of the master, officers and crew for lost personal effects and personal injuries", claiming that the collision was caused solely by the fault and negligence of the Cooper. The United States denied liability and countered with a crosslibel for damages to the Cooper, claiming the accident to have been due solely to faulty navigation by the Lena. On August 7, 1946, both parties consented to the entry of an interlocutory decree by the District Court. This recited that the parties had agreed that the vessels were equally at fault and decreed that Luckenbach, "as owner of steamship 'Lena Luckenbach' and on behalf of any others interested in said vessel, her use and operation, and as bailee of her cargo and on behalf of the master, officers and crew for lost personal effects and personal injuries", recover from the United States "one-half of the damages sustained by it as a result of the collision", and that the United States, as owner of the Cooper, recover half of its damages from Luckenbach, along with appropriate provisions for interest and costs. If the damages could not be agreed, either party might present an order for the appointment of a commissioner.
Since negligent operation of the Lena was an excepted cause under § 4(2) of the Carriage of Goods by Sea Act, 46 U.S.C. § 1304(2), the collision gave rise to no direct claim by the Lena's cargo against Luckenbach as owner of the carrying vessel. As will later be seen, an Agreement between the governments made it impossible for the British Government, quite apart from any question as to the extent of its interest in the Lena's cargo, to derive any financial benefit from asserting, or from having Luckenbach assert on its behalf, a claim for cargo damages against the United States as owner and operator of the Cooper. Neither, so long as the Both-to-Blame clause was considered valid, was there any possibility that the cargo claim could be utilized to impose partial liability on Luckenbach by invoking the rule of The Chattahoochee, 173 U.S. 540, 19 S. Ct. 491, 43 L. Ed. 801 (1899),*fn1 which permits the non-carrying vessel to recoup from the carrying vessel half of any amount awarded against the former in respect of damage to the cargo - even assuming for the moment that the inter-governmental agreement and the nature of the cargo permitted such an award to be made in favor of Great Britain against the United States.
The validity of the Both-to-Blame clause was challenged in United States v. The Esso Belgium, decided in the Southern District of New York on May 9, 1950, 90 F.Supp. 836. Although the decision there sustained the validity of the clause, this Court reversed sub nom. United States v. Farr Sugar Corp., 2 Cir., 191 F.2d 370 (1951), and the Supreme Court affirmed us sub nom. United States v. Atlantic Mutual Ins. Co., supra. This meant that the cargo was free of any obligation to indemnify the carrying vessel for amounts which the latter was bound under the Chattahoochee doctrine to contribute because of the cargo's damage claim against the non-carrying vessel. Meanwhile, in January, 1950, apparently sensing what might be in the wind, the United States Attorney for the Southern District of New York moved for, and was subsequently granted, leave to intervene on behalf of the British Government in Luckenbach's libel and to present its claim against the United States. The consequences to Luckenbach of a successful assertion of this claim and of recoupment by the United States of one-half of its liability to Great Britain, which is what this litigation is now about, can be appreciated if we move ahead of the story and calculate, on the basis of the subsequently stipulated damage figures, the result (before interest) if the cargo claim is excluded or included:
CARGO CLAIM EXCLUDED CARGO CLAIM INCLUDED
Half hull damage $100,736.69 Half hull $68,875.17
Less half hull 68,875.17 States' 175,000.00
damage to Cooper liability to