The opinion of the court was delivered by: LASKER
Stevens Institute of Technology (Stevens) sues for damages to a vessel it purchased from the United States in 1967. The government admits that the damages resulted from the negligence of one of its officers. The issues are the effect of certain exculpatory clauses contained in the contract of purchase and the amount of damages, if any, due Stevens.
The United States Maritime Administration had kept the SS Exochorda, a passenger vessel, "held up" since 1959 as a "navy retention ship." In 1967, Stevens submitted an Invitation to Bid (Exhibit E) to MARAD for the purchase of a passenger vessel which it hoped to use as a dormitory. The bid was conditioned on the promise that:
"The Buyer shall not at any time use or operate the ships, nor cause or permit same to be used or operated, as a means of transportation of passengers or cargo for hire, or as a means of transportation of proprietary cargo." (Condition I)
The bid contained further provisions that:
"IX. Terms of Sale. (A) Warranties. Each ship is offered for sale as is, where is, * * *, without warranty, guaranty, or representation as to seaworthiness, condition, description, tonnage, or otherwise. However, the bill of sale conveying title to the Buyer will fully warrant title and freedom from all liens.
(B) Responsibility for Ships. The Buyer of each ship shall assume all risks of ownership thereof from the time the Buyer receives notice of acceptance of its bid, and the Administration shall not thereafter be liable for any loss thereof or damage thereto either in whole or in part, nor will the Buyer be excused from performance or the purchase price be reduced by reason thereof.
(D) Delivery of Ships. (1) The Administration will, without cost or expense to the Buyer, but at the risk of the Buyer, break each ship out from its present location and make the ship available fleetside for delivery to the Buyer within five (5) days after receipt of written request therefor from the Buyer, provided, however, that the Administration shall not be liable for delay in breaking any ship out due to conditions beyond its control or conditions which by the exercise of reasonable diligence it was unable to prevent."
MARAD accepted Stevens' bid and the Government arranged for the vessel to be "broken out" from the fleet by MARAD's tugboats and personnel, in accordance with Paragraph IX(D)(1) of the Invitation to Bid. Stevens hired two tugboats to tow the ship to its next destination and offered their assistance, on the date of the breaking out, to Captain Syre, the MARAD officer in charge. Syre refused the offer, used only MARAD tugs and, in the process of removing the ship from the fleet, misjudged the force of the tidal current, causing damage to the ship's bulwarks at various locations, port and starboard. (Exhibit H) (Pre-trial Order Paragraphs (3) (xii)-(xix)). Although the estimated cost of repairs totalled $36,070., Stevens actually repaired the damage only partially, to the tune of $5,296.
A. Effect of Exculpatory Clauses
The government contends that Paragraphs IX(B) and (D) of the Invitation to Bid provide a complete shield against liability, even that occasioned by its own negligence. Stevens attacks this extreme stance, claiming that the clauses do not bar recovery because they do not explicitly exculpate negligent acts of the government; or that, if interpreted to cover the incident here, the provisions contravene public policy and are unenforceable.
1. It is settled that a contract and, in particular, exculpatory clauses, should be strictly construed against the drafter (here, the United States). As the Supreme Court has noted:
"A number of courts take the view, frequently in a context in which the indemnitee was solely or principally responsible for the damages, that there can be indemnification for the indemnitee's negligence only if this intention is explicitly stated in the contract." United States v. Seckinger, 397 U.S. ...