In re Herndon/Opinion of the Court

[403]

No. 291.

Argued Jan. 15, 1969.

Decided April 1, 1969.

John W. Hough, Chicago, Ill., for petitioner.

Paul McCambridge, Chicago, Ill., for respondent.

Mr. Justice STEWART delivered the opinion of the Court.

Under § 33 of the Longshoremen's and Harbor Workers' Compensation Act,1 an employer who pays compensation benefits to the representative of a deceased employee may be subrogated to the rights of the representative against third persons.2 The question presented by this case is whether a stevedoring contractor whose longshoreman employee was killed in the course of his employment is limited to this subrogation remedy in seeking reimbursement from a shipowner on whose vessel the longshoreman met his death. Both the District Court and the Court of Appeals held that statutory subrogation is the stevedoring contractor's exclusive remedy against the shipowner, and we granted certiorari to consider this novel question under the Act.

According to the stipulation of facts, the M/V Otterburn, owned and operated by respondent Burnside Shipping Co., was under time charter to Federal Commerce and Navigation Co., a Canadian corporation affiliated with the petitioner, Federal Marine Terminals, Inc. Federal Commerce hired Marine Terminals to continue the operation, already commenced by the ship's crew, of preparing the vessel to receive a cargo of grain. While the ship was docked in Detroit, the crew had commenced installation of 'grain feeders'-walled-in structures erected in the 'tween deck hatches to the height of the main deck hatch. After Marine Terminals had been employed to continue the work of readying the ship for its cargo, the boatswain, acting on the instructions of the ship's Chief Officer, 'winged out' the deep tank lids-that is, pulled them outboard into the wings of the 'tween deck. No railing, wire, or guard of any kind was placed around the resulting deep tank openings.

Marine Terminals' employees began working on the Otterburn after it had been removed the Chicago. On the morning of the third day of work, a group of Marine Terminals' stevedores, supervised by Gordon McNeill, arrived at approximately 7 o'clock to continue with carpentry work in the 'tween deck as part of the last stages of completing a grain feeder in the area of the 'winged out' deep tank lids. McNeill was last seen alive shortly after 8 a.m. At 8:45 a.m. his lifeless body was discovered lying at the bottom of one of the deep tanks. There were no witnesses to his 30-foot fall.

McNeill's widow filed a claim for benefits under the Act for herself and three minor children, and the Department of Labor entered a compensation order for weekly payments of $36.75 to the widow and $33.25 to the children. The potential total liability of Marine Terminals for these payments is approximately $70,000. As administratrix of McNeill's estate, his widow also filed a maritime wrongful death action against Burnside Shipping Co. in the United States District Court for the Northern District of Illinois. Burnside answered the complaint, denying that McNeill's death had been caused by its negligence or by its failure to furnish a seaworthy vessel.

Burnside also commenced a separate action in the same court against Marine Terminals seeking indemnification for any judgment it might be required to pay in the wrongful death action. The libel charged that, by virtue of the agreement with the time charterer to prepare the ship for its cargo, Marine Terminals 'warranted that its services to the vessel would be performed in a safe, workmanlike and seamanlike manner.' That warranty was alleged to have been breached and the accident caused by Marine Terminals' negligence, giving rise to an obligation to save Burnside harmless from all liability and expense occasioned by McNeill's death.

Marine Terminals filed an answer denying most of the allegations of the libel, and also filed a counterclaim seeking damages from Burnside for 'all sums which have been paid or will be paid' as compensation benefits to McNeill's dependents. The counterclaim alleged that Burnside, as owner and operator in control of the Otterburn, owed the stevedoring contractor 'the duty of providing and maintaining a safe place to work so that injury to the employees * *  * would be avoided.' Burnside had violated that duty, according to the counterclaim, by its negligence.

'in failing to properly guard the deep tank opening, or make     the passageway secure, or to cover up the said deep tank, and      in failing to clear the passageways, and failing to provide      adequate lighting in the area or to provide a safety railing      around the deep tank opening, thereby causing, suffering and      permitting the area and open deep tank to be a source of      menace and danger.'

Burnside oved to dismiss the counterclaim for failure to state a cause of action. Each party then filed a motion for summary judgment on its claim and counterclaim.

The District Court, finding that material factual disputes existed concerning the conduct of both parties, denied Burnside's motion for summary judgment on its complaint. But it did grant the motion to dismiss Marine Terminals' counterclaim. The court noted Marine Terminals' concession that its theory of a direct action against the shipowner was novel. Normally the stevedoring contractor is content with its remedy of subrogation to the rights of the deceased longshoreman's representative against whatever third party may be liable for the death, usually the shipowner. In this case, however, the applicable Illinois Wrongful Death Act limited the amount recoverable by the decedent's representative to $30,000, far short of Marine Terminals' potential liability of $70,000. The court recognized that '(t)he existence of such a direct right over is well established in certain situations,' but concluded that the employer's rights provided by the Longshoremen's and Harbor Workers' Compensation Act are exclusive and 'prevent him from maintaining an independent cause of action against the third party tortfeasor.'

The Court of Appeals affirmed, agreeing that Marine Terminals' sole remedy is by subrogation under the Act. But while the District Court had implied that the stevedoring contractor would have had a direct action had it not been abrogated by the Act, the Court of Appeals appeared to assume that, in the absence of the statutory remedy, federal maritime law would permit no direct recovery from the shipowner:

'There is no common law direct action as the defendant     argues. There is only the Longshoremen's and Harbor Workers'     Compensation Act which creates an entire legal procedure in      this part of admiralty law. We cannot search outside of the     Act for common law remedies which do not exist. The Act is     the source of all remedies.'

This case thus presents two questions. First, does § 33 of the Act exclude whatever other rights of action the stevedoring contr ctor might have against the shipowner for compensation payments to an employee or his representative? Second, if statutory subrogation is not an exclusive remedy, does the shipowner owe the stevedoring contractor any duty whose breach will give rise to a direct action? We consider these questions in order below.

The Court of Appeals was clearly mistaken in its assertion that '(t)he statutory method provides that the (stevedoring contractor) can sue only as a subrogee.' Nothing on the face of § 33 of the Act purports to limit the employer's remedy against third persons to subrogation to the rights of the deceased employee's representative. The provision of § 33 that the employer's payment of compensation 'shall operate as an assignment to the employer of all right of the legal representative of the deceased * *  * to recover damages against such third person' contains no words of limitation. Congress thereby gave the employer, in return for his absolute liability to the employee's representative, part of the latter's rights against others. But the legislative grant of a new right does not ordinarily cut off or preclude other nonstatutory rights in the absence of clear language to that effect. When Congress imposed on the employer absolute liability for compensation, it explicitly made that liability exclusive. Yet in the same Act it attached no such exclusivity to the employer's action against third persons as subrogee to the rights of the employee or his representative.

Nothing in the legislative history of the Act remotely supports the construction adopted by the courts below. And we can perceive no reason why Congress would have intended so to curtail the stevedoring contractor's rights against the shipowner. The exclusivity of the statutory compensation remedy against the employer was designed to counterbalance the imposition of absolute liability; there is no comparable quid pro quo in the relationship between the employer and third persons. On the contrary, as we emphasized in Ryan Stevedoring Co. v. Pan-Atlantic S.S.C.orp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, the Act is concerned only with the rights and obligations as between the stevedoring contractor and the employee or his representative. It does not affect independent relationships between the stevedoring contractor and the shipowner. Neither this Court nor, before this case, any other court has held that statutory subrogation is the employer's exclusive remedy against third party wrongdoers, and we decline to so hold today.

We must also reject the implication of the Court of Appeals' opinion that under federal maritime law the shipowner owed the stevedoring contractor no duties whose breach would give rise to a direct action for damages. As we held in Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 632, 79 S.Ct. 406, 410, 3 L.Ed.2d 550, 'the owner of a ship in navigable waters owes to all who are on board for purposes not inimical to his legitimate interests the duty of exercising reasonable care under the circumstances of each case.' That duty of due care imposed by law extends to the stevedoring company as well as to others lawfully on the ship, and its breach gives rise to a cause of action for any damages proximately caused. It is not disputed, for example, that if the shipowner's negligence caused damages to the stevedoring contractor's equipment, those damages would be recoverable in a direct action sounding in tort. We can see no reason why the shipowner's liability does not in like fashion extend to the foreseeable obligations of the stevedoring contractor for compensation payments to the representative of a longshoreman whose death was occasioned by the shipowner's breach of his duty to the stevedoring contractor.

We do not, of course, hold that the shipowner's duty to the employer is the same as to the employee. Nor do we disapprove the Court of Appeals' holding that the shipowner does not owe to the stevedoring contractor the absolute duty of seaworthiness owed to individual longshoremen. But Marine Terminals' counterclaim in this action did not rely on the unseaworthiness of the ship. Rather it charged that Burnside had been negligent in certain particular respects. And we have suggested before this that, while 'the duties owing from (the shipowner) to (the longshoreman) were not identical with those from (the shipowner) to (the stevedoring contractor),' the shipowner can be negligent with respect to the stevedoring contractor as well as to the longshoreman. Weyerhaeuser S.S.C.o. v. Nacirema Operating Co., 355 U.S. 563, 568, 78 S.Ct. 438, 441, 2 L.Ed.2d 491. Neither court below reached the question whether the counterclaim sufficiently alleged a breach of the duties owed by Burnside to Marine Terminals, and relevant factual questions remain unresolved. With the case in its present posture, therefore, we express no opinion as to whether the conduct of Burnside's employees amounted to a breach of the duty it owed to Marine Terminals. We hold only that federal maritime law does impose on the shipowner a duty to the stevedoring contractor of due care under the circumstances, and does recognize a direct action in tort against the shipowner to recover the amount of compensation payments occasioned by the latter's negligence.

This holding is in no wise a departure from our decision in Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 285, 72 S.Ct. 277, 280, 96 L.Ed. 318, that we would not 'fashion new judicial rules of contribution' between the shipowner and the stevedoring contractor as joint tortfeasors. Marine Terminals is not seeking contribution. It is not asking Burnside to share responsibility for their joint negligence with respect to McNeill. Rather the counterclaim seeks recovery of the full amount of Marine Terminals' liability under the Act to McNeill's representative; and it is founded not on Burnside's wrong to McNeill but on its independent wrong to Marine Terminals.

We further note that at this stage of the case it must be assumed that Marine Terminals was faultless vis-a-vis Burnside, for the claim that Marine Terminals breached its Ryan warranty of workmanlike service has not yet been adjudicated and is not before us. We decide nothing today with respect to the interaction between the shipowner's breach of warranty claim and the stevedoring contractor's tort claim. Marine Terminals has charged Burnside with negligence not as a defense to the latter's Ryan claim but in a counterclaim for damages, and we have considered that claim without regard to the implications of the shipowner's countervailing cause of action. Our holding is perforce limited to a rejection of Burnside's argument that 'a shipowner's tortious conduct may be used as a shield, but not as a sword.'

In holding that the stevedoring contractor has a direct action in tort, we do not preclude the possibility of a direct action under some other theory. Marine Terminals argues in this case, for example, that just as a stevedoring contractor impliedly warrants to a shipowner under Ryan that it will perform the stevedoring services in a workmanlike manner, so also there are reciprocal contractual warranties running from the shipowner to the stevedoring contractor. Burnside counters with the observation that the stevedoring contract in this case is between Marine Terminals and its affiliate Federal Commerce, the time charterer, and that there is therefore no privity of contract between Marine Terminals and Burnside. Because the record before us contains neither the contract for stevedoring services nor the charter agreement, we cannot now assess these arguments. We do not know, for instance, whether any provisions of the time charter contain express or implied warranties which would inure to the benefit of Marine Terminals as stevedoring contractor.

Marine Terminals has also argued that, aside from any express or implied-in-fact contract, it has a quasi-contractual right of indemnity for the liability which it incurred under the Act on account of the shipowner's wrong. This right, which was evidently recognized by the District Court, is said not to stem solely from the pre-existing contractual relationship between the parties, but to be conferred by law in order to place the liability where it justly belongs. As one court has described it,

'admiralty courts have recognized a right to indemnity, as     distinguished from contribution, in a person who has      responded in damages for a loss caused by the wrong of      another. This right has been recognized in two general     classes of cases: those in which the person seeking      indemnification was without fault; and those in which such      person was passively negligent, but the primary cause of the      loss was the active negligence of another.'

Recovery can be based on this concept, Marine Terminals contends, because Burnside's conduct was either solely or primarily responsible for MeNeill's death.

We express no opinion on the validity of this indemnity theory or its application to this case, but hold only that Marine Terminals is not foreclosed by any decision of this Court from raising it in the District Court. We have cautioned that 'in the area of contractual indemnity an application of the theories of 'active' or 'passive' as well as 'primary' or 'secondary' negligence is inappropriate,' Weyerhaeuser S.S.C.o. v. Nacirema Operating Co., 355 U.S. 563, 569, 78 S.Ct. 438, 442, 2 L.Ed.2d 491. But that proscription in terms applied only 'in the area of contractual indemnity' under Ryan. In Ryan itself we specifically did 'not meet the question of a noncontractual right of indemnity or of the relation of the Compensation Act to such a right.' 350 U.S., at 133, 76 S.Ct., at 237. By leaving open the question of such an indemnity action by the shipowner against the stevedoring contractor, a fortiori we did not decide anything with respect to such an action by the stevedoring contractor against the shipowner.

Because, as we hold today, § 33 of the Longshoremen's and Harbor Workers' Compensation Act is not the exclusive source of the stevedoring contractor's remedies against the shipowner, and the former may have a cause of action in tort for the compensation payments caused by the shipowner's negligence, we reverse the judgment of the Court of Appeals and remand this case to the District Court for further proceedings consistent with this opinion.

It is so ordered.

Reversed and remanded with directions.