U.S. Supreme Court Craig v. Continental Ins. Co., 141 U.S. 638 (1891)
Craig v. Continental Insurance Company
Argued November 6, 9, 1891
Decided November 23, 1891
141 U.S. 638
ERROR TO THE CIRCUIT COURT OF THE UNITED
STATES FOR THE EASTERN DISTRICT OF MICHIGAN
The provisions of § 4283 of the Revised Statutes relieving the owner of a vessel from liability for a loss occasioned without his privity or knowledge apply to an insurance company to which, as insurer, a vessel has been abandoned, and which was charged with negligence in causing the vessel to be so towed that she sank and became a total loss, and the life of an employee on board of her was lost.
The identity of the vessel was not lost, she being officered and manned and having on board a cargo.
The provisions of § 4283 apply to cases of personal injury and death.
The extinguishment of liability may be availed of as matter of law, on the facts, in a suit to recover for the death of the employee.
The provisions of the statute apply to a vessel used on the Great Lakes, she not being "used in rivers or inland navigation" within the meaning of § 4283.
The insurer being a corporation, the privity or knowledge of a person who was alleged to have been guilty of the negligence, and who was not a managing officer of the corporation or employed directly by it, and whose powers were no greater than those of the master of a vessel, was not the privity or knowledge of the corporation.
The Court stated the case as follows:
This is an action at law brought by Thomas Craig, administrator of the estate of John Carbry, deceased, against the Continental Insurance Company of New York, a New York insurance corporation, and three other insurance corporations to recover under a statute of Michigan (2 Howell's Annotated Statutes of Michigan §§ 8313, 8314) $25,000, as damages for the death of Carbry, for the benefit of his mother and his three minor sisters as next of kin and distributees of his estate, it being alleged that he lost his life through negligence of the defendants in December, 1883. It was commenced in the Superior Court of the City of Detroit, Michigan, and was removed by the defendants into the Circuit Court of the United States for the Eastern District of Michigan.
The defendants were insurers against marine risks of a steam propeller called the Enterprise. While on a voyage on the lakes, she was stranded November 20, 1883, on rocks at Green Island, in the northern part of Lake Huron. She had on board a cargo of merchandise and a crew of 10 or 12 men. After the stranding, her owners abandoned her to the insurers, and she became the property of the latter. The general agent of the Continental Insurance Company for the lake region was Mr. Dimock, of Buffalo, New York, who was also a member of the firm of Crosby & Dimock, of that place, who were general agents for several other companies. James J. Reardon, of Buffalo, was employed by Crosby & Dimock as a marine inspector. Among his other duties was that of going, when notified, to the assistance of wrecked and stranded vessels insured by companies represented by Crosby & Dimock, and getting them to a port of safety. On November 29, 1883, Reardon was notified by Crosby & Dimock in regard to the Enterprise, and went with a steam tug called the Balize, with steam pumps and engineers, to the assistance of the Enterprise. One of the steam pumps was in charge of Carbry. Soon after their arriving at the place where the Enterprise was, her crew being still on board of her, and in charge of her, the steam pumps were set up, and she was pumped out and pulled off from the place where she had stranded. This was done under the supervision of Reardon. She was more or less injured by the stranding, but when she was got off, she was towed into deep water and, although she leaked, she was kept free by the use of one pump for about 66 hours -- from 10 o'clock Thursday morning until 4 o'clock the following Sunday morning. Part of her cargo had been removed, but it was replaced. Her machinery was disabled, and it was necessary that the Balize should take her in tow, to remove her to a port where she could be repaired. She started in to astern of the Balize, bound for Detroit at 4 o'clock on Sunday morning, December 9, 1883, with her cargo on board, and a crew of 13 men, including 4 who were in charge of 2 steam pumps, one of which was under the care of Carbry. Her mate was in command of her. Reardon was on board of the Balize. No trouble was experienced
in the navigation of the Enterprise until 2 o'clock on the morning of the next day -- 22 hours after she had started -- and then, while off Point aux Barques and Saginaw Bay, she filled and sank, and became a total loss, and Carbry lost his life. He was 22 years of age. The declaration alleged that his life was lost through the negligence of the defendants in particulars which it specified.
The defendants having, in the state court, separately demanded a trial of the matters set forth in the declaration, the action was, after its removal, tried in the circuit court of the United States before the district judge, Judge Brown (now of this Court) and a jury, and, under the instruction of the court, a verdict was rendered in favor of the three defendants other than the Continental Insurance Company. The trial proceeded against the latter company, and resulted in a verdict against it for $8,000. On motion, and in February, 1886, the verdict was set aside and a new trial was granted. The opinion of the court on the motion, delivered by Judge Brown, is reported in 26 F. 798. The ground assigned for granting the motion was that the liability of the defendant, if any, was destroyed because it was subject to the provisions of § 4283 of the Revised Statutes of the United States, and the Enterprise was totally lost during the voyage on which the death occurred. A judgment was then entered in favor of the three defendants other than the Continental Insurance Company.
The new trial was had before Judge Brown and a jury in March, 1886. There is a bill of exceptions, which states that the court instructed the jury to render a verdict in favor of the defendant, which was done. The plaintiff excepted to the instruction of the court. The bill of exceptions contains all the evidence offered on both sides. A judgment in favor of the defendant was rendered in September, 1887, and the plaintiff has brought the case to this Court by a writ of error. It is stated in the bill of exceptions that prior to the sending of the expedition under Reardon to rescue the Enterprise, she had been abandoned by her owners to the Continental Insurance Company, by which she was insured, and had
become its property, and that, by reason of her being sunk at the time Carbry lost his life, she became and was a total loss.
MR. JUSTICE BLATCHFORD delivered the opinion of the Court.
The principal contention on the part of the plaintiff is that § 4283 of the Revised Statutes does not apply to the case. That section is as follows:
"SEC. 4283. 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, [loss?] 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."
It is contended that the statute does not apply, because the vessel had been wrecked and abandoned to the underwriters; that they cannot be relieved, under the statute, from their liability for negligence while engaged in saving the wreck or the cargo, and that she had lost her identity as a vessel.
But we are of opinion that her identity was not lost. She was still a vessel. She had lost her own power of locomotion, but she was capable of being towed as a vessel, and was so towed for 22 hours, and until she had accomplished a large portion of her voyage. She was officered and manned, and had on board a cargo. If, during the 22 hours, through the negligence of those on board of her and in charge of her, she had done damage by coming into collision with another vessel and survived, she could have been libeled as a vessel, and she could have been libeled for salvage. She was in the same condition as any vessel which at sea loses her means of propulsion and has to be towed into port. The fact that, as between her former owner and the insurance company, she had been abandoned as a total loss does not affect the question. She was abandoned as a total loss to her owner for the purposes of the policy of insurance, but, as in numerous other cases of abandonment, she was abandoned with the privilege to the insurance company of treating her as a vessel and repairing her if it could. Her ownership by the insurance company, resulting from the abandonment, was of the same character as would have been her ownership by any person who had purchased her in her then condition from the former owner. After her abandonment, she entered upon a new career and a new voyage, and § 4283 applies to the liability of the owner of her on such voyage, for damages for the death of Carbry.
It was held by this Court in Butler v. Boston & Savannah Steamship Co., 130 U. S. 527 , that the provision of § 4283 applies to cases of personal injury and death as well as to cases of loss of or injury to property. Whatever liability there was on the part of the defendant was extinguished by the loss of the Enterprise, and the extinguishment of such liability may be availed of in this suit, as matter of law, on the facts of the case. The Scotland, 105 U. S. 24 ; Providence & N.Y. Steamship Co. v. Hill Mfg. Co., 109 U. S. 578 , 109 U. S. 594 . The restriction of the statute by § 4289 to vessels not "used in rivers or inland navigation" does not apply to the Enterprise, because she was used on the Great Lakes. American
Trans. Co. v. Moore, 5 Mich. 368; Moore v. Transportation Co., 24 How. 1.
The only question remaining is as to whether the loss of Carbry's life occurred with the privity or knowledge of the insurance company, it being contended that the knowledge and privity of Reardon were those of the company. But it was held by this Court in Walker v. Transportation Co., 3 Wall. 150, in regard to the statute Act March 3, 1851, § 1, 9 Stat. 635, now § 4282 of the Revised Statutes, which provides as follows:
"No owner of any vessel shall be liable to answer for or make good to any person any loss or damage which may happen to any merchandise whatsoever which shall be shipped, taken in, or put on board any such vessel by reason or by means of any fire's happening to or on board the vessel unless such fire is caused by the design or neglect or such owner,"
that, in order to make the owner of a vessel, in case of loss by fire, liable for negligence, it must appear that the owner had directly participated in the negligence. It was there said that as the object of the act was "to limit the liability of owners of vessels," and the exception was not, in terms, of negligence generally, but only of negligence of the owners, it would be a strong construction of the act to hold that the exception extended "to the officers and crews of the vessels, as representing the owners;" that section 6 of the act (now § 4287 of the Revised Statutes) showed that it was the purpose of the preceding sections to release the owner from some liability for the negligence and fraud of the master and other agents of the owner, for which those persons were themselves liable and were to remain so, and that, in reference to fires occurring on the vessels to which the statute applied, the owner was "not liable for the misconduct of the officers and mariners of the vessel, in which he does not participate personally." The same rule is applicable to the words "privity or knowledge," in § 4283.
When the owner is a corporation, the privity or knowledge must be that of the managing officers of the corporation. In Hill Manufacturing Co. v. Providence & New York Steamship Co., 113 Mass. 495, 499-500, it was said that the object
of the statute was to exempt the owners of ships from the onerous liability to which they were held by the common law, as common carriers or otherwise, for the acts or neglect of their servants or agents or of third persons, without their own knowledge or concurrence, not to diminish their responsibility for their own willful or negligent acts, and it was added:
"If a loss by fire is caused either by the design of by the neglect of the owners of a ship, the first section of the statute does not limit or take away their common law liability. If the owners are a corporation, the president and directors are not merely the agents or servants, but the representatives of the corporation, and the acts, intentions, and neglects of such officers are those of the corporation itself."
The corporation in the present case was protected by the statute from loss or damage arising from the fault or negligence of the mate or any of the crew or other employees who were on board of the Enterprise, and a fortiori it was protected from loss or damage arising from the fault or negligence of Reardon. The only negligence alleged in the case is that of Reardon in attempting to tow the Enterprise, in the condition in which she was, to Detroit. But he was not an officer of the corporation or employed directly by it, but was employed by Dimock, or Crosby & Dimock, the agents at Buffalo. He was at most a mere employee of the corporation. He was not its general agent, nor, so far as appears, had it any knowledge of his appointment. If he was an agent at all, his powers were no greater than those of the master of a vessel, for whose negligence the owner is not liable even though the privity or knowledge of the master exists. The knowledge of Reardon was not the private knowledge of the corporation.
It is unnecessary to consider any of the other questions discussed at the bar, and the judgment is