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22. Tae Marine Review AN IMPORTANT RULING The Circuit Court of Appeals Holds That the Limited Liability Act Does Not Cover the Liabilities Which Spring From an The United States circuit court of appeals, sixth district, Judges Lurton, Severens and Richards, has just de- livered an opinion in the case of the Great Lakes Towing Co. of Cleveland against the Mills Transportation Co. of Port Huron, placing an interpreta- tion upon the limited liability act, which is, of great interest to vessel owners and wrecking companies alike. The case has relation to the strand- 'ing of the steamer Newago on Devil's Tsland Shoal, Georgian Bay, on Nov. 17, 1903. The wrecker Favorite be- longing to the fleet of the Great Lakes Towing Co, was sent to her relief. On arrival the Favorite found the Newago difficult of access, being in a place of great danger. She stood by, however, and endeavored for. sev- eral days to rescue the steamer. Her efforts were unsuccessful and the Favorite was finally discharged from further service. The Newago was lost and only about $156 in value of her remnants were saved. The Great Lakes Towing Co. presented a bll of ~ S4o00 for ten days service. The Mills Transportation Co. contended that it was not personally liable and that recourse was. available only against the vessel, of which only the remnants as mentioned remained. Ac- cordingly the Mills Transportation Co. filed a pétition for the limitation of its liability. The remnants were ap- Praised and a bond: given "by the Mills Company in the sum of $250. The Great Lakes Towing Co. filed an answer in opposition to the limitation and asked for a decree for the pay- ment of its bill. The district court of the United States for the eastern district of Mich- igan, before which the case was_tried, held in favor of the Mills Transporta- tion Co., decreeing that its liability was limited to the remnants of the vessel. It is this decision that the circuit court of appeals has set aside as in erfor. By the Act of 1851 (Section 4283 Revised Statutes) it was enacted that: 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, damage,- or ivurfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall in no case ex- ceed the amount or value of the interest of such owner in such vessel, and her freight then pending. And by Section 18 of the Act of Owner's Personal Conduct or Stipulations June 26, 1884, it was further enacted that: The individual liability of a shipowner shall be limited to the proportion of any or all debts and liabilities that his individual share of the vessel bears to the whole; and the aggregate liabilities of all the owners of a vessel on account of the same shall not ex- ceed the value of such vessel and freight pending; Provided, that this provision shall not affect the liability of any owner incurred previous to the passage of this act, nor pre- vent any claimant from joining all the owners in One action; nor shall the same apply to wages due to persons employed by said ship owners. The court regards the Act of 1851 as the basic law to which the Act of 1854 is intended to be merely supple- mentary. Act of 1884 was not intended to have application to liabilities of the owners of vessels' for the consequences of their personal faults or of obl'gations personally contracted by them. Quot- ing the opinion the court says: "The purpose of congress was as we think to 'relieve the shipowner from the consequences of those extraordi- nary risks which were imposed with- out limitation by the law of the Ad- miralty as that law had been interpret- ed in this country. And by extra- ordinary risks we mean those risks arising from the conduct of, and con- tracts made by, those who are beyond the personal supervision and control of the owner and yet have legal authority to bind him to answer for their conduct or contracts or, to ex- press the thought in another way, that the liabilities intended by this legislation were those peculiar to him as. a shipowner and had been imputed to him because of his relation to the. ship, and not those liabilities, whether for torts. or from, contracts, which spring from its own personal conduct ° or stipulations. It seems to us alto- gether unlikely that congress intended to qualify the power of an owner to make contracts in relation to his ship which by the universal law would be valid if made about anything else and would be 'enforced in the courts in common law actions. It would be an anomaly that a party competent to do business should be unable to make a valid contract about his own affairs, or be given such an immunity as to make his stipulations of uncertain value. Such a doctrine would be in- convenient in the last degree to the owners of vessels and the interests of commerce, If in every case the party who should undertake to render assist- ance to other vessels' on request of The court holds that the the owner, should be dependent on the proceeds of the vessel for his com- pensation he would be likely to con- sider the chances, and the sorer the need of the services the less likely would the owner be to secure them. Instead of relieving him of a burden, he would be burdened with the disa- bility of pledging his personal credit for.the securing of the needed assist- ance. Besides the history of the law upon this subject furnishes an argu- ment in favor of the construction we think should be put upon the statute. It is succintly stated by Mr: Justice Bradley in Butler v. Boston Steam- siiig Co. 130 US. 5270. Prom an early period the maritime law of the commercial nations of the Continent of Europe had accorded to the owners of ships this limitation of liability to the value of the ship and freight earned. But this limitation was not allowed when the liability was in- curred with the privity or knowledge of the owner. The maritime law of the continent was 'not accepted by the English courts and was rejected by the courts of this country. The acts of 1851 and 1884 have established in the United States the rules of the general maritime law upon this sub- ject and in almost the. identical lan- guage in which' those rules have been expressed in the codes and text- books of the countries in which the general law had been embodied. As Mr. Justice Bradley said, in reference to the divergence in this country from the general maritime law, and the re- turn thereto by the enactment of the statutes here for-the relief of ship- owners, 'We have rectified that.' And we are convinced that the general understanding of the courts of this country is that the statutes here en- acted have restored the old rule for the like occasions, namely, when the liability of the owner has occurred without his own participation in the cause or creation of the liability. The suggestion of Mr. Justice Bradley in Butler v. The Boston and Savannah Steamship Co., although not necessary to the decision of that case, seems to have been generally adopted as indi- cating the proper construction. In- deed prior to that decision, the stat- utes including that of 1884 had re- ceived that construction by Judge Brown in the Southern District of New York in The Amos D. Carver, Oe 0G. 605: Force' vy Providence Ins. Co., 35 Fed. 767; and Miller v. ODvies, 35 Feds 3779 And in later decisions that learned and_ distin- guished judge maintained the doctrine he had previously declared, Laverty v. Clausen, 40 Fed. 542; Gokey v.