Bisso v. Inland Waterways Corp. , 75 S. Ct. 629 ( 1955 )

Mr. Justice Black

delivered the opinion of the Court.

The question presented is whether a towboat may validly contract against all liability for its own negligent towage. Since there is no controlling statute the question must be decided as a part of the judicially created admiralty law. Federal courts have disagreed as to whether there is or should be a judicial rule invalidating such contracts. Calling attention to this uncertainty, the District Court, sitting in admiralty, sustained a contractual provision exempting respondent towboat owner from liability for negligence and entered judgment accordingly. 114 F. Supp. 713. The Court of Appeals affirmed. 211 F. 2d 401. We granted certiorari to settle the question. 348 U. S. 811.

The record including the findings of fact shows: Petitioner’s oil barge Bisso while being towed up the Mississippi River by the respondent’s steam towboat Cairo collided with a bridge pier and sank. At the time, the barge had no motive power, steering apparatus, officers or crew, its movements being completely controlled by the Cairo. Negligent towage by those operating the Cairo caused the collision. Consequently, respondent, owner of the Cairo, would have been required to pay petitioner damages unless relieved of liability by certain clauses in the towage contract. One provides that the towing movement should be at the “sole risk” of the barge, and a second provides that masters, crews and employees of the towboat Cairo should “in the performance of said service, become and be the servants” of the barge Bisso. The Court of Appeals construed both these clauses as relieving respondent from liability for its negligence and held both valid.

A release-from-liability clause in a towage contract was first considered by this Court in 1871 in The Steamer Syracuse, 12 Wall. 167. There negligent towage by the Syracuse damaged a canalboat being towed. To escape liability owners of the towboat relied on a contractual agreement that “the canal-boat was being towed at her own risk.” Notwithstanding the agreement, this Court held that the towboat “must be visited with the consequences” of its negligence.¹ For many years The Syracuse seems to have been generally accepted as either (1) construing a contract to “tow at own risk” as not including an exemption from negligence, or (2) holding invalid as against public policy a contract which exempts a tower from his negligence.²

In 1909 The Syracuse was repudiated by the Second Circuit in The Oceanica, 170 F. 893. That court construed a contract requiring a towed vessel to “assume all risks” as exempting the tower from responsibility for its negligence; it also held, over strong dissent, that the contract was not invalid as against public policy. And on rehearing the court conceded that “the decision of the majority of the court as to the right of a tug to contract against her own negligence is a departure from previous decisions.” The court went on to express hope that the question would “be set at rest in this case by the Supreme Court.” Certiorari was denied,³ however, and courts in the Second Circuit continued to follow the newly announced Oceánica doctrine.⁴ But other circuits continued to refuse to allow towboats by contract to escape liability for their negligent towage.⁵

It was in that state of intercircuit conflict that this Court again, in 1928, considered the effect of a contract claimed to exempt a towboat from its negligence. The Wash Gray, 277 U. S. 66.⁶ The contract involved provided that the towboat should not be “responsible in any way for loss or damage” to the Wash Gray, the vessel being towed. This Court was urged to follow The Oceánica. But counsel for the Wash Gray, relying on The Syracuse, insisted that recovery for “actionable negligence is not barred by release in contract for towage.” ⁷ Without mention of The Oceánica this Court said: “We do not think that the towing contract has the effect claimed for it by the companies. It did not release the [towboat] . . . from any loss or damage to the ‘Wash Gray’ due to the negligence of the master or crew of the towing vessel .... The rule laid down by this Court in The Steamer Syracuse . . . covers the point.” 277 U. S., at 73. The contracts in The Syracuse and The Wash Gray were worded quite differently, and there is little indication that the “rule” the Court had in mind was one of mere contractual interpretation. Rather a public policy objection to such contracts was indicated by the Court’s quoting from that part of The Syracuse opinion which pointed out that despite the contract there the towboat had to bear the consequences of its negligence even though the law had not imposed on it the obligations resting on a common carrier.⁸

It is nevertheless argued that The Syracuse and The Wash Gray did not announce a rule of public policy against release-from-negligence contracts but decided no more than what the towage contracts in those cases meant. Strong arguments can be made in support of this contention but we think stronger arguments can be made against it. The Syracuse was decided in an era of manifest judicial hostility toward release-from-negligence contracts, particularly those made by businesses dealing widely with the public and having potential monopolistic powers.⁹ That hostility caused this Court two years later to declare that public policy forbade common carriers to make such contracts.¹⁰ The next year telegraph company contracts were brought under the same ban although the Court stated they were not common carriers.¹¹ Largely because of this general judicial attitude and the influence of The Syracuse no towage release-from-negligence clause appears to have been enforced by any court for 38 years. During that period and later enforcement was refused in two ways — either by giving such contracts a very narrow construction or by holding them to be against public policy. One court even expressly declared it to be “contrary to public policy to so construe” a contract that a tower could be allowed to go clear of all liability for his own negligence.¹² When the Second Circuit belatedly departed from The Syracuse other courts still refused to enforce towers’ stipulations against their negligence. And when this Court was urged in The Wash Gray to repudiate The Syracuse by following The Oceánica the answer was an emphatic reiteration and approval of the language and holding of The Syracuse. Viewed in light of this history, we think The Syracuse, The Wash Gray and intervening lower court cases together strongly point to the existence of a judicial rule, based on public policy, invalidating contracts releasing towers from all liability for their negligence.¹³ Because of this judicial history and cogent reasons in support of a rule outlawing such contracts we now, despite past uncertainty and difference among the circuits, accept this as the controlling rule.

This rule is merely a particular application to the tow-age business of a general rule long used by courts and legislatures to prevent enforcement of release-from-negligence contracts in many relationships such as bailors and bailees,¹⁴ employers and employees,¹⁵ public service companies and their customers.¹⁶ The two main reasons for the creation and application of the rule have been (1) to discourage negligence by making wrongdoers pay damages, and (2) to protect those in need of goods or services from being overreached by others who have power to drive hard bargains.¹⁷ These two reasons are no less applicable today than when The Syracuse and The Wash Gray were decided. And both reasons apply with equal force whether tugs operate as common carriers or contract carriers.¹⁸ The dangers of modern machines make it all the more necessary that negligence be discouraged. And increased maritime traffic of today makes it not less but more important that vessels in American ports be able to obtain towage free of monopolistic compulsions.

The practical result of leaving towers wholly free to contract against all liability for their negligence is strikingly illustrated in an English case. The Port of London controlled and operated all tugs in the harbor and by law no ship could enter without the aid of Port Authority tugs. But no shipowner could get a Port tug unless he first signed a contract agreeing to be liable for all damages caused by the negligence of the tug’s employees. Under such a contract the court allowed the Port Authority to recover damages from a ship towed for injuries to the Port’s tug caused by negligence of the Port’s employees running the tug.¹⁹ Such a result would be impossible under the rule we accept as controlling.

It is contended that the towage contract rule we have accepted was rejected by this Court in Sun Oil Co. v. Dalzell Towing Co., 287 U. S. 291.²⁰ We disagree. Unlike The Syracuse, The Wash Gray and the instant case, Sun Oil did not involve a contract designed to relieve a towboat owner from liability for negligent towage. The contractual clause there involved related only to pilotage. The clause provided that a tug captain who piloted a vessel propelled on its own power should be considered the servant of that vessel and that the tug owners should not be liable for his negligent pilotage.²¹ Sun Oil construed this contract as relieving the tugboat owners from all liability for negligence of the tug captain while piloting Sun Oil’s vessel and held the contract valid as thus construed. But both the Court of Appeals²² and this Court recognized that holding the pilotage contract valid did not conflict with The Syracuse or The Wash Gray. Indeed, this Court expressly stated that the Sun Oil decree was “not in conflict with the decisions” in The Syracuse and The Wash Gray. It is of course possible that the Court found an absence of conflict in the cases because of a different construction given the different contracts involved. We doubt this, but however this may be there are more basic differences upon which we prefer to rest this Court’s statement that Sun Oil did not conflict with the two prior cases.

There are distinctions between a pilotage and a towage exemption clause which make it entirely reasonable to hold one valid and the other invalid. A pilotage clause exempts for the negligence of pilots only; a towage clause exempts from all negligence of all towage employees. Pilots hold a unique position in the maritime world and have been regulated extensively both by the States and Federal Government.²³ Some state laws make them pub-lie officers, chiefly responsible to the State, not to any private employer. Under law and custom they have an independence wholly incompatible with the general obligations of obedience normally owed by an employee to his employer.²⁴ Their fees are fixed by law and their charges must not be discriminatory. As a rule no employer, no person, can tell them how to perform their pilotage duties. When the law does not prescribe their duties, pilots are usually free to act on their own best judgment while engaged in piloting a vessel. Because of these differences between pilots and towage employees generally, contracts stipulating against a pilot’s negligence cannot be likened to contracts stipulating against towers’ negligence. It is one thing to permit a company to exempt itself from liability for the negligence of a licensed pilot navigating another company’s vessel on that vessel’s own power. That was the Sun Oil case. It is quite a different thing, however, to permit a towing company to exempt itself by contract from all liability for its own employees’ negligent towage of a vessel. Thus, holding the pilotage contract valid in the Sun Oil case in no way conflicts with the rule against permitting towers by contract wholly to escape liability for their own negligent towing. That rule renders invalid the first provision of the contract in this case that the towing had to be done at the sole risk of the towed vessel.

The second clause in the contract — that the employees of the towboat Cairo should be servants of the barge Bisso — likewise cannot be enforced. For if valid, the only effect of that clause would be to shift all liability for negligent towage from the towboat to the vessel being towed, precisely what the first clause attempted to do. This is true because employees of a towboat do not become employees of a vessel being towed just because a contract says so, when as here the workers are in truth and in fact solely employees of the towboat.²⁵ This towboat belonged to respondent. It was manned by workers hired and paid by respondent. They remained at all times subject to respondent’s complete control. In contrast, the owners of the barge being towed never had any relationship of any kind or character with those who controlled and operated the towboat. The rule against contractual exemption of a towboat from responsibility for its own negligence cannot be defeated by the simple expedient of providing in a contract that all employees of a towboat shall be employees of the towed vessel when the latter “employment” is purely a fiction.

Reversed

Mr. Justice Harlan took no part in the consideration or decision of this case.

1 “It is unnecessary to consider the evidence relating to the alleged contract of towage, because, if it be true, as the appellant says, that, by special agreement, the canal-boat was being towed at her own risk, nevertheless, the steamer is liable, if, through the negligence of those in charge of her, the canal-boat has suffered loss. Although the policy of the law has not imposed on the towing boat the obligation resting on a common carrier, it does require on the part of the persons engaged in her management, the exercise of reasonable care, caution, and maritime skill, and if these are neglected, and disaster occurs, the towing boat must be visited with the consequences. It is admitted in the argument, and proved by the evidence, that the canal-boat was not to blame, and the inquiry, therefore, is, was the steamer equally without fault?” The Steamer Syracuse, 12 Wall. 167, 171.

2 See, e. g., Alaska Commercial Co. v. Williams, 128 F. 362, 366 (1904); The Edmund L. Levy, 128 F. 683, 684 (1904); The M. J. Cummings, 18 F. 178 (1883); The Jonty Jenks, 54 F. 1021, 1023 (1893); The Oceanica, 144 F. 301 (D. C. W. D. N. Y. 1906). See also cases collected in 54 A. L. R. 104, 243-257.

3 215 U. S. 599.

4 See, e. g., Ten Eyck v. Director General of Railroads, 267 F. 974 (1920); The Mercer, 14 F. 2d 488 (1926).

5 See Mylroie v. British Columbia Mills Tug & Barge Co., 268 F. 449 (C. A. 9th Cir.); Great Lakes Towing Co. v. American S. S. Co., 165 F. 2d 368 (C. A. 6th Cir.); The Somers N. Smith, 120 F. 569 (D. C. Me.); The Monarch, 235 F. 795, 799 (D. C. N. D. Fla.); The Sea Lion, 12 F. 2d 124 (D. C. N. D. Calif.); The Vim, 40 F. 2d 638 (D. C. R. I.). See also Walter G. Hougland, Inc. v. Muscovalley, 184 F. 2d 530 (C. A. 6th Cir.). Compare The Pacific Maru, 8 F. 2d 166 (D. C. S. D. Ga.).

6 Officially reported as Compañía de Navegacion Interior, S. A. v. Fireman’s Fund Ins. Co., 277 U. S. 66.

7 Supplemental Brief for Petitioner, p. 10, The Wash Gray, 277 U. S. 66.

8 See note 1, supra.

9 The same attitude was manifested by the rulings of those courts which imposed the strict liability of common carriers on tugs. See Smith v. Pierce, 1 La. 350 (1830); Vanderslice v. The Superior, 28 Fed. Cas. 970 (D. C. E. D. Pa. 1850); White v. The Mary Ann, 6 Cal. 462 (1856); Ashmore v. Penn. Steam Towing & Transp. Co., 4 Dutcher 180 (N. J. 1860); Wooden v. Austin, 51 Barb. 9 (N. Y. 1866). As to liability of steamships generally see Butler v. Pennsylvania, 10 How. 402, 416.

10 Railroad Co. v. Lockwood, 17 Wall. 357. See also Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 129 U. S. 397.

11 Express Co. v. Caldwell, 21 Wall. 264, 269-270; see also Brown v. Postal Tel. Co., 111 N. C. 187, 16 S. E. 179.

12 “Such a bargain doubtless means something; but it is contrary to public policy to so construe a contract of that nature that the tower is allowed to go clear of all liability when it is shown that he has relaxed his faithfulness and duty in performing the service.” Ulrich v. The Sunbeam, 24 Fed. Cas. 515 (1878). See Note, 175 A. L. R. 8, 18.

13 Writers have differed as to the validity of such towage clauses. Of two leading authors on admiralty one regards the clauses as valid, 1 Benedict, Admiralty (6th ed. 1940), § 100, and the other regards them as invalid, saying “Thus obliquely it seems to be settled that the contract exempting the tug from its negligence is not valid.” Robinson, Admiralty (1939), 672.

14 See cases collected in 175 A. L. R. 110-141; Willis, The Right of Bailees to Contract Against Liability for Negligence, 20 Harv. L. Rev. 297.

15 Duncan v. Thompson, 315 U. S. 1; Boyd v. Grand Trunk Western R. Co., 338 U. S. 263, 266; see Beers, Contracts Exempting Employers from Liability for Negligence, 7 Yale L. J. 352.

16 See cases collected in 175 A. L. R. 38-74.

17 Id., at 8-157. On the question of towage contracts exempting towers from negligence see note 2, supra, and cases collected in 54 A. L. R. 104.

18 Part III of the Interstate Commerce Act regulates tugs as common carriers under some circumstances and as contract carriers under others. 54 Stat. 929-952, 49 U. S. C. §§901-923. See Cornell Steamboat Co. v. United States, 321 U. S. 634. Apart from statutes towboats sometimes operate in such way that they are held to be common carriers. See note 9, supra. And it is a long settled policy that common carriers cannot by contract escape all liability for their own negligence. See, e. g., Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 129 U. S. 397, 438-443. An examination of the cases, however, discloses the difficulty of determining when a tug is or is not operating as a common carrier.

19 The President Van Buren, 16 Aspinall's Maritime Cases (N. S.) 444. A further illustration of the monopoly potential of the tug business is suggested in Boston Metals Co. v. The Winding Gulf, decided today, post, p. 122. Petitioner in that case insisted before the Court of Appeals that if given an opportunity it could present evidence showing that when it executed the contract containing the proscribed clause with the Foundation Maritime of Canada that company had a virtual monopoly in all eastern Canadian seaports and that the petitioner’s boat could not have been moved at all unless it agreed to the conditions forced on it in that contract.

20 The Second Circuit has taken this position. North River Barge Line v. Chile S. S. Co., 213 F. 2d 882, 884 (1954). The Oceánica was adhered to, but apparently on slightly different grounds from those originally relied on. Holding a towage agreement for exemption from negligence valid, the court said, “A contrary dictum in The Syracuse . . . was approved in [The Wash Gray']. But we think that Sun Oil . . . is to be taken as, in effect, accepting the doctrine of The Oceánica.”

21 “When the captain of any tug engaged in the services of towing a vessel which is making use of her own propelling power goes on board said vessel, it is understood and agreed that said tugboat captain becomes the servant of the owners in respect to the giving of orders to any of the tugs engaged in the towage service and in respect to the handling of such vessel, and neither the tugs nor their owners or agents shall be liable for any damage resulting therefrom.” 287 U. S., at 292-293.

22 55 F. 2d 63.

23 See, e. g., R. S. §§ 4235-4237, 4442, 4444, 46 U. S. C. §§ 211-215; 40 Stat. 549, 46 U. S. C. § 223; R. S. § 4439, 46 U. S. C. § 228; R. S. §§4449, 4450, as amended, 46 U. S. C. §§239, 240; McKinney’s N. Y. Laws, Navigation Law, §§ 41, 64, 87-98, Penal Law, §§ 1501, 1913, 1961, Lien Law, §80; Kotch v. Board of River Port Pilot Comm’rs, 330 U. S. 552, 557-564; Cooley v. Board of Wardens, 12 How. 299.

24 Ibid. See also The China, 7 Wall. 53; The Eugene F. Moran, 212 U. S. 466; Smith v. Pierce, 1 La. 350, 357-358 (1830).

25 See The Adriatic, 30 T. L. R. 699; compare The President Van Buren, 16 Aspinall’s Maritime Cases (N. S.) 444.