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Humble Oil & Refining Co. v. Philadelphia Ship Maintenance Co.

decided: June 3, 1971.


Hastie, Chief Judge, and Seitz and Aldisert, Circuit Judges.

Author: Aldisert


ALDISERT, Circuit Judge.

This appeal presents the tridimensional conflict created when a longshoreman seeks redress from the shipowner for injuries sustained in the course of his employment, and the shipowner, in turn, looks to the stevedore for indemnification. We must examine the scope of a stevedore's duty to defend and indemnify the shipowner, and determine whether a refusal to accept a tender of defense collaterally estops the stevedore from litigating those facts resolved in the longshoreman's action.

Under contract to load stores aboard appellee's vessel, appellant sent four men, including a foreman, aboard the SS ESSO LIMA on September 25, 1964. Among the cargo to be stowed were several machinery crates, some weighing approximately 350 pounds. The foreman requested and was denied use of the ship's boom to assist in the stowage. He directed his men to proceed loading the crates by hand. In order to load the crates through the pipe rail, an opening in the deck railing, the men removed the lower of two protective chains. The upper chain was rusted and frozen and could not be disconnected. One crate lodged against that chain. While attempting to free the crate and slide it up through the passage, Marion Domeracki, one of the longshoremen, permanently injured his back. He brought suit against the shipowner on April 12, 1965, for his damages.*fn1 On March 3, 1966, the shipowner instituted this action in admiralty, seeking indemnification for the damages awarded in the Domeracki action. The district court, 312 F. Supp. 380, granted the shipowner's motion for summary judgment and the stevedore appealed.

The grant of summary judgment was predicated on determinations that the seven special interrogatories posed to the jury in Domeracki*fn2 resolved all genuine issues of material fact, and that the conclusion was ineluctable as a matter of law that any unseaworthiness or negligence attributed by that jury to the shipowner "were conditions created or brought into play by Stevedore's breach of [implied] warranty." The district court found that "on these facts Stevedore must indemnify Shipowner. Italia Societa per Azioni di Navigazione v. Oregon Stevedoring Co., [376 U.S. 315, 84 S. Ct. 748, 11 L. Ed. 2d 732 (1964)]; Crumady v. The Joachim Fisser, [358 U.S. 423, 79 S. Ct. 445, 3 L. Ed. 2d 413 (1959)]; Gilchrist v. Mitsui Sempaku K. K., [405 F.2d 763 (3 Cir. 1968)]; Dunn v. Ove Skou Rederi A/S, [45 F.R.D. 18 (E.D.Pa.1968)]." Humble Oil v. Philadelphia Ship, 312 F. Supp. 380, 386 (E.D.Pa.1970). It thus becomes necessary to assess the nature of the warranty a stevedore impliedly grants to a shipowner.

Though a shipowner's liability to a longshoreman injured on his vessel is virtually absolute,*fn3 the liability of the stevedore for indemnification is not coextensively comprehensive. Indeed, prior to 1956 a careless stevedore who may have "created" a condition of unseaworthiness, but who was not by express terms contractually bound to indemnify, was not required to make a contribution to judgments paid by a shipowner to an injured longshoreman. Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 72 S. Ct. 277, 96 L. Ed. 318 (1952); Pope & Talbot, Inc. v. Hawn, 346 U.S. 406, 74 S. Ct. 202, 98 L. Ed. 143 (1953). See also Baer, Admiralty Law of the Supreme Court, ยง 8.1 at 193-95 (1969).

A new course was charted in Ryan Stevedoring v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 76 S. Ct. 232, 100 L. Ed. 133 (1956), in which the Court found nothing to preclude the stevedore from contracting with the shipowner to indemnify it for any claims upon which injured longshoremen might recover against the shipowner or the vessel in rem. Indeed, Mr. Justice Burton found a warranty implicit in the stevedoring contract:

Competency and safety of stowage are inescapable elements of the service undertaken. This obligation is not a quasi-contractual obligation implied in law or arising out of a noncontractual relationship. It is of the essence of petitioner's stevedoring contract. It is petitioner's warranty of workmanlike service that is comparable to a manufacturer's warranty of the soundness of its manufactured product. The shipowner's action is not changed from one for a breach of contract to one for a tort simply because recovery may turn upon the standard of the performance of petitioner's stevedoring service. Id. at 133-134, 76 S. Ct. at 237.*fn4

In Weyerhaeuser S.S. Co. v. Nacirema Operating Co., 355 U.S. 563, 78 S. Ct. 438, 2 L. Ed. 2d 491 (1958), the Supreme Court, again faced with facts indicating that the stevedore was substantially responsible for a longshoreman's injuries, reaffirmed the shipowner's right to indemnification created in Ryan, but not without reservation: "If [the stevedore] rendered a substandard performance which led to foreseeable liability of [the shipowner], the latter was entitled to indemnity absent conduct on its part sufficient to preclude recovery." Id. at 567, 78 S. Ct. at 441 (emphasis supplied). Without delineating what conduct would have barred the success of the shipowner's indemnity claim, Weyerhaeuser nonetheless explicitly rejected tests traditionally utilized to evaluate negligence claims: "In the area of contractual indemnity an application of the theories of 'active' or 'passive' as well as 'primary' or 'secondary' negligence is inappropriate. Ryan Stevedoring Co. v. Pan-Atlantic S.S. Co., supra, 350 U.S. at 132-133, 76 S. Ct. at pages 236-237." Id. at 569,*fn5 78 S. Ct. at 442.

In Italia Societa per Azioni di Navigazione v. Oregon Stevedoring, 376 U.S. 315, 84 S. Ct. 748, 11 L. Ed. 2d 732 (1964), indemnity was held proper even though the Court explicitly conceded that the stevedore had not been negligent. Mr. Justice White emphasized that a "tort standard of negligence [is] inapplicable to the stevedore's liability under its warranty of workmanlike service." Id. at 323,*fn6 84 S. Ct. at 753.

In short, indemnification may be required under a breach of warranty theory even when the stevedore is not negligent, Italia; supra, or when the shipowner's own negligence is the primary cause of the longshoreman's injury, Gilchrist v. Mitsui Sempaku K.K. supra. It appears from the cases that any unreasonable action by a stevedore which activates or exacerbates a latent or manifest condition of unseaworthiness will establish the shipowner's right to indemnification. Crumady v. J. H. Fisser, supra ; Williams v. Ocean Transport Lines, Inc., supra.

The inapplicability of negligence principles, however, is a two-edged sword. A specific finding of negligence does not necessarily establish a breach of warranty, and indemnity may be refused. Hagans v. Farrell Lines, Inc., 237 F.2d 477, 480 (3 Cir. 1956); Reddick v. McAllister Lighterage Line, 258 F.2d 297, 300 (2 Cir. 1958). As stated in Waterman Steamship Corp. v. David, 353 F.2d 660, 662 (5 Cir. 1965): "If a vessel's unseaworthiness prevents the stevedore's workmanlike performance, that is 'conduct' on the part of the shipowner 'sufficient to preclude recovery' and to excuse even a negligent breach by the stevedore."*fn7

From these cases emerges an admittedly abstruse test for indemnity which is perhaps better articulated in terms of shifting burdens than in precise standards of conduct: once a condition of unseaworthiness is established in a direct action against the shipowner, the burden falls on the owner to demonstrate (a) that the condition of unseaworthiness was caused or activated by the stevedore, and (b) that such action by the stevedore constituted a breach of his implied warranty of workmanlike service.*fn8 The burden then shifts to the stevedore to ...

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