Erastus Cornelius Benedict.

The American admiralty, its jurisdiction and practice, with practical forms and directions online

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amounts and causes thereof, and the names and addresses of the
lienors, so far as known ; also the special facts on which the right to
surrender the vessel is claimed, notwithstanding such subsequent
trip or voyage, and whether the vessel sustained any injury upon,
or by reason of such subsequent voyage or trip.

Upon surrender of the vessel no final decree exempting from lia-
bility will be made until all such liens as may be admitted or proved,
prior to such final decree, to be supeiior to the liens of the claims
limited, shall be paid or secured independently of the property sur-
rendered, as may be ordered by the Court ; and the monition in cases
of sunender, shall cite all persons having any claim upon the vessel
to appear on the return day or be defaulted, as in ordinary process
in rem.

Rule 75.

If, instead of a surrender of the vessel, an appraisement thereof
be sought for the purpose of giving a stipulation for value^ the libel
or petition must state the names and addresses of the principal cred-
itors and lienors, whether on contract or in toit, upon the V(»yage on
which the claims are sought to be limited, and the amounts of theii*
claims, so far as they are known to the petitioner, and the attorneys
or proctora in any suits thereon ; or if such creditoi-s or lienors be
very numerous, then a sufficient number of them properly to repre-
sent all in the appraisement ; and notice of the proceedings to ap-
pmise the property shall be given to such creditors as the Court
shall direct, and to all the attorneys and proctoi*s in such pending
suits.

§ 566. Other Matters to be Pleaded.— But besides the matters
which are required by these rules some other matters should be
stated. It has been held that the petition should state that there
is more than one claim against which the limitation is sought, or
such a special case as does not admit of the owner's availing him-
self of the benefit of the act by answer to a suit to recover such
claim. ^

. But that was a case in which a common law suit had been begun

against the owner uix)n the only claim. It would seem that the

«TheRo8a, 53F. R. 132.



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LIMITATION OF LIABILITY.



325



owner ought not to be compelled in such a case to await the begin-
ning of a suit against him. And the provision allowing him to
convey his vessel to a trustee has no such exception. And the doc-
trine of The Rosa was subsequently distinctly disapproved by the
Circuit Court of Appeals for the Fii-st Circuit in Quinlan v. Pew, 56
F. R. 111.

It has been held that it is not necessary tp allege in the petition
that the amount of the claims is greater than the value of the ves-
sel and freight pending.^ But I think the allegation should always
be inserted.

Previous to the act of 1884 it was always proper, if not neces-
sary, to aver in the petition that the liabilities had been incurred
" without the privity or knowledge " of the petitioner.

Th« language of that act would seem, on its face, to have removed
that necessity by allowing owners of vessels to limit their liability
for acts which had been done with their privity or knowledge, such,
for instance, as acts of their own personal negligence, and even
their own pei'sonal contracts. For the wording of the 18th sec-
tion of that act is that " the aggiegate liabilities of all the owners
of a vessel on account of the same shall not exceed the value of such
vessel and freight pending."^ And the holding, that the liability
of 'the owner of a vessel for a collision caused by his pei'sonal neg-
ligence, or his liability on a conti*act for supplies for the voyage, is
included in " the aggregate of his liabilities on account of the same,"
is to say the least an obvious construction of that section. But it
has been decided in the lower courts that these words do not include
the liability of the owner on his own personal contract,*^ ** but only
his liability on account of the vessel, that is, the liability that is
imposed on him by law in consequence of his ownei-ship of the ves-
sel, viz., for the contract or acts of the ship or her master without
the owner's express intervention." And the language of Justice
Bradley in the case of Butler v. Steamship Co.,** that ** it is possible
that this language was intended to remove all doubts of the appli-
cation of the limited liability law to all cases of loss and injury
caused without the privity or knowledge of the owner," indicates
the possibility of a holding by the Supreme Court that notwithstand-



» The Garden City, 26 F. R. 770.
»See Whitcomb v. Emerson, 50 F. R.
128.
n The Amos D. Carver, 35 F. R. 665;



McPhail V. WiUiams, 41 id. 61 ; The Giles
Loring,48id.471.
«2 130 U. S. 654.



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326



THE AMERICAN ADMIRALTY.



ing this act of 1884 the liability of an owner does not extend to his
personal contract or to damages for his personal act or negligence.

It is therefore still advisable for the petitioner to aver in his peti-
tion, if he can, that the liability was incurred " without his privity
or knowledge."

The meaning of the words "privity or knowledge " was discussed
by Judge Sawyer in the case of Lord v, Goodall, N. & P. S. S. Co.
(4 Sawyer, 299), with the conclusion that " there must be some per-
sonal concurrence or some fault or negligence on the part of the
owner himself, or in which he personally participates to constitute
such privity, within the meaning of the act, as will exclude him from
the benefit of its provisions." ®

The petition should also contain an offer to surrender the peti-
tioner's interest in the vessel and freight pending to the court, or, if
that cannot be done, an offer to pay into court their appraised value
or to give a stipulation for the payment of such appraised value
into court when ordered.

The omission to allege a jurisdictional fact may afterwards be
amended, but it may make necessary the issuing of an alias moni-
tion.^

In the case of The Tolchester* various suits had been brought
against the owners of the vessel claiming various amounts of un-
liquidated damages. Her owners filed a petition in limitation of
liability, averring that these amounts exceeded the value of the ves-
sel ; the various pai-ties thereupon in those suits reduced the amount
of their claims to sums which amounted to less than the value of
the vessel, and on the motion to enjoin them from proceeding in their
suits, they averred that by reason of such reduction the Admimlty
court had no jurisdiction. But the court held that the jurisdiction
already acquired could not be thus divested.

§ 566. Pleading where all Liability is Contested.— If it is in-
tended by the owner to contest all liability, as well as to limit its
amount if established, the petition should allege, in addition to the
jurisdictional facts, also the facts and circumstances by reason of
which exemption from all liability is claimed, as, for instance, in a



•'See also Craig r. Continental Ins.
Co., 26 F. R. 292, and The Anna, 47 id.
525; Matter of tlie Petition of Meyers
Excursion Co., 57 id. 240; Quinlan, v.



Pew, 56 id. 111.

»• Pet. of the L. I. N. S. etc. Co., 5
F. R. 599.

85 42 F. R. 180.



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LIMITATION OF LIABILITY. 827

collision case, the facts which show that the opposing vessel was
solely in fault It is not necessaiy to admit in the petition any lia-
bility against which the limitation is sought.

§ 566 a. The Prayer of the Petition. — The prayer of the petition
must vary according to the circumstances of the case.

1. If no proceeding has been taken against the vessel or her owner
the prayer should be for the appointment of a trustee to whom the
petitioner may convey the vessel and freight, or for the appraise-
ment of the vessel and freight in order to the giving of a stipulation
for the appraised value or its payment into court, and for a moni-
tion to all persons having claims, citing them to appear and answer,
(naming them as far as possible) and for an injunction against the
prosecution of suits against the vessel or her owner, and for a de-
cree limiting the liability of the owner or exempting him from all lia-
bility, as the case may be.

If for any reason it should be desirable to have the vessel seized
by the marshal under process against her, such process should be
prayed for.*

2. If the vessel or her proceeds is in custody or has been bonded
in another suit, the prayer should be for an appraisal of the vessel
and her pending freight and for an order for the release of the ves-
sel and freight, on the giving of the stipulation in the limited lia-
bility proceeding, if that be desired, and for a perpetual stay in the
other proceeding, with prayers for process, injunction and final de-
cree as above.

§ 567. Stipnlation for Costs. — It is the more usual practice in
the Second Circuit to give, on filing the petition, a stipulation for
costs in the sum of $250, as in cases in rem. But the language of
the rule being that " no process in rem should be issued " without
such a stipulation, it is questionable whether a stipulation in this
amount is requisite unless process is issued. But in all cases a stip-
ulation for costs in at least the sum of f 100 is necessary.^

§ 568. The Surrender.— If the vessel and freight are in a condi-
tion to be surrendered by the petitioner, and it is proposed to sur-
render them, they must be so surrendered to the court, either by

*^ The John BramaU, 10 Ben. 499, 510.
»^ Dist Rule 7.



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328 THE AMSUICAN ADMIRALTY.

their seizure by the marshal under process issued against them,*^ or
by a transfer of them to a trustee. In the latter case, on the filing
of the petition the court makes an order, appointing a trustee and
directing a conve)^ance to such trustee by the petitioner of his in-
terest in vessel and freight.

In the appointment of such trustee the national character of the
ship should be considered, and if possible the nationality of the ship
and the trustee should be the same, in order to avoid question as to
the title which the trustee can convey when he sells.

The words " transfer his interest to a trustee," in the statute,
must be held to include not only the execution of the instrument
but the delivery of the property under it. For it might easily be that
the mere execution of the instrument of conveyance would furnish
nothing to the limitation proceeding, as, for instance, in case the ves-
sel were at the time in custody of a court in a suit against the owner
for some pei^sonal debt which was not a liability to be limited.

If the vessel therefore is not in a condition to be surrendered, the
rules provide an equivalent proceeding by appraisement and stipula-
tion ; and in that case an order is made by the court, referring it to
a commissioner of the court to appraise the value of the interest of
the petitioner in the vessel and freight pending, or ordering such ap-
praisal in some other valid way.^

A surrender of the vessel may be made, even though in a suit
against her she may have been bonded for value, and has thereafter
made voyages, provided her value be unimpaired at the time of the
surrender.*®

§ 569. The Injunction.— The next thing to be obtained is the
injunction. But when has the court jurisdiction to issue it? If
the vessel has been surrendered to a trustee appointed by the court,
or seized by the marshal, the court then has the res and has jurisdic-
tion to make any necessary order in the proceeding. And if the
court cannot gain possession of the res itself (as if it be destroyed,
or in another district or in the custody of another court) a stipu-
lation for the appraised value or its payment into court will be taken
in place of the res. And when that is done the court also has un-
doubted jurisdiction to make any necessaiy order. And it has been



«8 (As to this, quoere. See the John
Bramall, 10 Ben. 511.)
» In re Morrison, 147 U. S. 14.



♦0 The Rose Culkin, 52 F. R. 332; Dist.
Rule 74.



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LDkllTATION OF LIABILITY. 329

held that the court acquires juiisdiction on the filing of the peti-
tion. In one case the petition was filed in the Eastern District of
New York, and on the same day but at a later hour a libel was filed
in the Southern District against the petitioner in personam and, proc-
ess of foreign attachment liaving issued, the marshal of the South-
ern District seized the vessel. The libellant in that cause objected
to the jurisdiction of the court of the Eastern District, but that court
decided in favor of its jurisdiction.*^ But two things are to be noted
as to that case, viz., that the vessel was within the jurisdiction of
both districts and that both courts were courts of admiralty. If
the court under wliose process the vessel had been seized had been
a state court, a different question might have been presented.

And moreover an action had been brought against the owner of
the vessel in the Supreme Court of the state within the Eastern
Distiict.

As soon as the court has fully acquired jurisdiction by having
gained possession of the vessel or having received the stipulation
for value, or the fund itself, or some part thereof,*^ the issuing of
the injunction seems by the 54th Rule to be made imperative on the
court, if the owner shall apply for it.

Whether the court has jurisdiction to issue an injunction on the
filing of the petition and before it has obtained the possession of
the rea or some part of the re«, or the stipulation for the appraised
value, has not perhaps been fully settled. But such injunctions
have been issued. If such an injunction is asked, secuiity that the
stipulation for the appraised value will be given must be furnished
before the injunction will be issued.*^

If an injunction is sought to stay the further prosecution of any

particular suit or claim it should be specified in the injunction. And

as the petition may not result in a decree in favor of the petitioner

it is pi-oper to make the injunction at first only till the further order

. of the court.

The injunction should be effective to stay proceedings in a suit
against the shipowner in a state court,** except so far as regards
the recovery of costs in such suit.*^



*^ The Thingvalla — not reported. See
The Luckenback, 26 F. R. 870.

^ Ex parte Slayton, 105 U. S. 451.

♦« Tlie Garden City, 27 F. R. 234.

*< Prov. & N. Y. S. Co. t>. HiU Man.
Co., 100 U. S. 578; The case of Knowlton



». N. Y. & Prov. S. S. Co. (53 N. Y. 76),
was not referred to by the court, but
must be held to have been overruled.

♦6 Pet. of the N. & N. Y. Trans. Co.,
10 Ben. 193.



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830 THE AMERFCAN ADMIRALTY.

§ 570. The Appraisement. — Where the petition asks an appraise*
nient, the court on application makes an order for such appraise-
ment. It may join with this order an order for the payment into
court of the amount of such value when appraised, or for the giving
of a stipulation with sureties that such appraised value will be paid
into court whenever such payment may be ordered. Or the order
may be in the first place merely for the appraisal, postponing, till
tlie appraisal has been completed, the order for the payment into
court or the stipulation.

As will be seen, it is provided in the rule that the monition to
cite opposing parties to appear shall issue when the court has ob-
tained possession of the res by reason of the money having been
paid into court, or a stipulation having been given, or a trustee ap-
pointed and a transfer of the vessel to him ordered and made, while
the proceedings for the appraisal in order to such payment into court
or stipulation (proceedings in which the parties to be cited are vi-
tally interested), are preliminary to the payment into court or the
giving of the stipulation.

The only provision of the 54th Rule bearing on this point is that
the court is to have "caused due appraisement to be had." This,
word " due " is very flexible and leaves much to the discretion of
the court. In the case of The H. F. Dimock, the owner filed a, pe-
tition in the District Court of Massachusetts, the vessel being in
Boston, and on such petition the court appointed appraisei"a, who ap-
praised the vessel without actual notice to any one, according to the
practice of that court. And the owner having given a stipulation
in the appmised value, the injunction was issued. A claimant
thereafter filed a libel against the vessel in another District, but it
was held that the District Court of Massachusetts had acquired sole
jurisdiction of the case.*®

In the New York districts the more usual practice is to order a
reference to a commissioner to make such appraisal, and to order
notice to be given to any parties who have claims and are within the
jurisdiction of the court.*^ For this purpose, the petitioner should
furnish to the court a statement of all the parties, as far as known,
in order that they may be notified. But it might easily be that no
such parties are within the jurisdiction, and that the appraisal must
be made without notice to parties who were to be vitally afifected

<«The H. F. Dimock, 52 F. R. 598; In re Morrison, 147 U. S. 14.
*' D. C. Rule 75.



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LIMITATION OF LIABILITY.



331



by it. In that case, it behooves the court and the petitioner also to
see to it that the appraisement is ** due." If any party who has had
no notice of the appraisement, coming in when notified by the mo-
nition, finds cause to believe that the property has not been rightly
appraised, and shows it to the court, it is doubtless within the pow-
er of the court to order a new appraisement, and to order a larger
stipulation to be furnished by the petitioner.^®

§ 571. What is to be appnised.— The subject to be appraised is
the value of the inteiest of the petitioner in the vessel and freight
pending. Where the vessel had been sunk by the collision but was
afterwards raised and repaired, such value was held to be what she
was worth when raised, less the expense of raising her.^ In accord-
ance with this view,' the value of the freight pending would seem to
be the net freight after paying the expenses necessarj'- to the earning
of it.

Where a tug, while towing, met with disaster and her owner pe-
titioned to limit his liability, it was held that the towage compensa-
tion which she earned was not freight pending.^

Demurrage due on a charter has been held to be " freight pend-
ing," and also the earnings of a fishing vessel for the season.*^

The outfit of a whaler is to be included in estimating her value.
But there is no freight pending in a whaling voyage.^^

If a vessel previous to the limitation of liability proceedings has
been libelled for the claims and in that suit security for her value
has been given, the amount of that security may or may not fix the
value for the limitation proceeding.^ And a doubt has been sug-
gested whether the amount of the proceeds of the vessel when sold
in another proceeding must in all cases be taken, notwithstanding
the final sentence of Rule 57.^



§ 572. Prior Liens on the YesseL — But suppose the vessel at the
time when the proceeding is instituted by the owner is incumbered
by a mortgage, or by some prior lien, is the owner bound to free her



*« The Anna, 47 F. R. 525.

«• Pet. of N. & N. Y. Trans. Co., 8
Ben. 312.

•** Pet. of Owners of The Younj? Amer-
ica and The John E. Berwind, Eastern
Dist. of N. Y., June, ISiK).



"The Giles Loring, 48 F. R. 473;
Whitcomb r. Emerson, 50 id. 128.

M The Helen Mar, 2 Lowell, 49, 52.

"Petition of The Norwich Co., 8
Ben. 312; The Benefactor, 103 U. S.
246; The Doris Eckhoflf, 30 F. R. 140.

« The U. S. Grant, 45 F. K. (542.



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832 THE AMERICAN ADMIRALTY.

from such mortgage or lien before taking his proceeding? If he con-
vey the vessel to a trustee is he bound to convey her free from all
mortgages or liens ? Or, if he is not, is the mortgagee or prior lien-
holder compelled to come into the proceeding to defend his mort-
gage, or does the security of the mortgage or lien remain unaffected
by the limited liability proceedings? In other words, the owner's
liability being limited to the value of his interest in the vessel and
her freight, is such " interest in the vessel " only his equity of re-
demption or is it his interest as it would be after all prior liens are
satisfied? The following must be the guiding principle, viz., that
if an owner seeks to obtain from the court a decree limiting his lia-
bility, it is incumbent upon him to see to it that the court has the
reB itself within its control to be disposed of according to the rights
of all parties interested.

Suppose then that, on the petition of the owner, process were is-
sued against the ship, and she were thus brought into the possession
of the court. The court, if she were not bonded, must dispose of
her and could only do so by a sale. There would seem to be no
reason why a sale under process in such a proceeding, after the usual
notice to all the world, should not have the full force of other sales
by Admiralty Courts ; and if so, such a sale would give a title to the
ship clear of mortgage or other liens ; and in that case, clearly the
rights of the mortgagee or other lienor would be transferred to tlie
fund, and it would be necessary for him to come into the proceeding
and test the priority of his mortgage or lien over the other claims
which were then presented.

It may be doubted whether a sale by a trustee would convey au
equally clear title ; and it might be that an owner who wished to prefer
a mortgagee might convey his vessel to a trustee, with the idea that
the mortgagee, by giving notice of his mortgage at the trustee's
sale, might seek before some of their tribunal to maintain the lien
of his mortgage notwithstanding the trustee's sale. But, if the
effect of such action were shown to be to subordinate to a moit-
gage, liens which in the limited liability proceeding would be given
a priority, the Admiralty Court, by its power to refuse a decree of
limitation of liability, would have the means of remedying any such
injurious action of the petitioning owner.

It would seem to follow that where an appraisal of the value of
the interest of the owner is had, whether for the purpose of payment
into court or stipulation, it should be an appraisal of the value of



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LIMITATION OF LIABILITY. 883

the ship and pending freight, or the share of it belonging to the
petitioner, without regard to any mortgage or other lien.

§ 578. The Same. — One case bordering upon this question came
before the court in the Southern District of N. Y. Parties having
a claim against the owners of a vessel brought suit against them in
the Supreme Court of the state, and obtained an attachment against
their property as non-residents, under which the sheriff seized the
vessel. The owners of the vessel removed the cause into the Cir-
cuit Court of the United States, and filed a petition in the District
Court, in limitation of liability and obtained the appointment of a
trustee, to whom they made an actual surrender of the freight pend-
ing, and made a conveyance of the vessel ; whereupon the plaintiffs in
the state court suit were cited to appear, and an order staying pro-
ceedings in their suit was made and they appeared in the limited lia-
bility proceeding. On an application to the court by the trustee on
affidavits showing the condition of affairs and the necessity for a sale
of the ship to save deterioration and expense, the court ordered the
trustee to sell the ship free and clear of any lien on her by the attach-
ment, and that the plaintiffs in the suit co-operate with the trustee in
perfecting the sale by directing the sheriff to surrender the vessel to
the ti-ustee for the purpose of enabling him to sell ; and that the lien
which the plaintiffs in the suit had obtained by their attachment, if
any, should be transferred to the proceeds of the sale by the trustee,
subject to the final decree of the court. The sheriff's fees were by
consent ordered to be paid by the trustee out of the proceeds of the
sale."

It will be noticed that in this case the claim for which the vessel
was held under the attachment was one against which the limitation
of liability was sought, and the creditor had appeared in the limited
liability proceedings and was therefore subject to the order of the
court and was ordered to direct the sheriff to surrender the vessel to



Online LibraryErastus Cornelius BenedictThe American admiralty, its jurisdiction and practice, with practical forms and directions → online text (page 34 of 80)