United States v. Atlantic Mutual Insurance Co.

Facts

Ps are cargo owners who shipped goods on the steamship Nathaniel Bacon owned by P and operated as a common carrier of goods for hire. It collided with the Esso Belgium and Ps' cargo was damaged. The ships were also damaged. Ps sued D to recover. The bill of lading issued by The Bacon to Ps contained a 'Both-to-Blame' clause. The clause requires the cargo owners to indemnify the carrier Bacon for any amounts The Bacon loses because damages recovered by the cargo owners from The Belgium are included in the aggregate damages divided between the two ships. It was held in the District Court that the collision was due to negligent navigation by employees of both ships. The cargo owners were in no way at fault. The court ordered The Belgium, as one of two joint tortfeasors, must pay '100%' of damages suffered by The Bacon's cargo owners. Because of § 3 of the Harter Act and § 4 (2) of the Carriage of Goods by Sea Act, the cargo owners were barred from directly suing The Bacon for cargo damages. Since the two ships were mutually at fault, the aggregate of all damages to both should be shared by both. In computing the aggregate damages caused by both ships, an account should be taken of the cargo damages recovered from The Belgium by the cargo owners. Ps contend that the Both to Blame clause is void and unenforceable as a violation of the long-standing rule of law which forbids common carriers from stipulating against the consequences of their own or their employees' negligence. D contends that § 3 of the Harter Act, as substantially reenacted in § 4 (2) of the Carriage of Goods by Sea Act, provides special statutory authorization permitting ocean carriers to deviate from the general rule and to stipulate against their negligence as they did here. The Court held the clause valid. The Court of Appeals reversed. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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