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Hon. WARREN G. MAGNUSON,

U.S. DEPARTMENT OF JUSTICE,
OFFICE OF THE DEPUTY ATTORNEY GENERAL,
Washington, D.C., February 16, 1962.

Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.

DEAR SENATOR: This is in response to your request for the views of the Department of Justice on S. 2314, a bill to limit the liability of shipowners, and for other purposes.

The bill will liberalize the present U.S. law by establishing a limitation fund of $140 per ton for personal injury and death recoveries exclusively; and another fund of $67 per ton to be divided ratably with cargo irrespective of the value of the vessel and irrespective of whether the vessel is a total loss.

This bill is designed to bring our limitation of liability statutes up to date and in conformity with the maritime laws of other countries which have adopted the Brussels Convention on Limitation of Liability of 1947. Some sort of reform was overdue and the present bill represents the result of a long study of the matter by admiralty experts.

For the foregoing reasons, the Department of Justice favors the enactment of this legislation.

The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the administration's program. Sincerely yours,

BYRON R. WHITE, Deputy Attorney General.

COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, August, 9, 1961.

B-131747.

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,
U.S. Senate.

DEAR MR. MAGNUSON: We refer again to your letter of July 28, 1961, acknowledged July 31, requesting our comments on S. 2314, a bill to limit the liability of shipowners, and for other purposes. We note that the bill is identical with H.R. 7912 of the current Congress except that the latter includes dollar equivalents of limitations on liability expressed in gold francs.

We have no special information or knowledge on the need for or desirability of the legislation and, therefore, make no recommendations as to its enactment. Sincerely yours,

JOSEPH CAMPBELL,

Comptroller General of the United States.

PACIFIC AMERICAN STEAMSHIP ASSOCIATION,
San Francisco, Calif., February 26, 1962.

Re S. 2313 and S. 2314: Limitation of shipowner liability.

Hon. WARREN G. MAGNUSON,
Chairman, Committee on Commerce,
U.S. Senate,

Washington, D.C.

DEAR MR. CHAIRMAN: Pacific American Steamship Association takes this opportunity to indicate its full support for the above two bills whose purpose is to clarify in law the statutes of shipowners in regard to public liability. This will be accomplished through the implementation of the International Convention on Limitation of Shipowners' Liability of 1957 as well as the International Collision Convention of 1910. Both of these conventions have been either ratified or implemented in law by a number of maritime nations and it is for the purpose of conforming U.S. law to the laws of other maritime nations that we seek favorable action of the Congress in this matter.

Mr. Peter N. Teige, vice president of American President Lines, will testify on behalf of this association at hearings scheduled to commence February 28. Yours very truly,

82677-62-6

RALPH B. DEWEY.

Senator BARTLETT. Mr. Elder, how long would you require?
Mr. ELDER. No more than 5 minutes, sir.

Senator BARTLETT. Come up, then.

STATEMENT OF SCOTT H. ELDER, OF JOHNSON, BRANAND & JAEGER, CLEVELAND, OHIO, ON BEHALF OF LAKE CARRIERS ASSOCIATION

Mr. ELDER. My name is Scott H. Elder, from Cleveland. I appear as assistant counsel for the Lake Carriers Association and also a practicing attorney and member of the firm of Johnson, Branand & Jaeger, in Cleveland, Ohio.

I appear here on behalf of Lake Carriers Association, an organization of vessel owners and operators operating about 95 percent of the American-flag Great Lakes fleet. These vessels are all engaged in bulk-cargo transportation.

I wish merely to say that the Lake Carriers Association favors in principle the two bills, S. 2313 and S. 2314.

With respect to the first bill, I would like to point out that half of, or approximately half of, the territorial waters of the Great Lakes are within Canada. Canada already has apportionment of liability. So we do have a problem on the lakes when a collision occurs; whether it occurs in Canadian waters or American waters has great bearing on how the liabilities are divided.

Frequently it is impossible to tell whether a collision is in Canadian waters or United States waters.

Senator BARTLETT. What do you do in such a case

?

Mr. ELDER. Well, there are several ways of solving it.

First of all, the courts frequently duck the issue, because they will say, "Well, if both vessels are equally at fault, it makes no difference whether it is under the Canadian law or the United States law." That was one fairly recent case.

If the collision is between two American vessels within Canadian waters, frequently the parties will stipulate that it is governed according to the U.S. law.

Where the collision is between a foreign vessel and a U.S. vessel, it has been stipulated that the liabilities will be determined according to the Brussels Convention. That is one recent case that has taken place on the lakes.

It is rather a moot question, frankly, where two American vessels are involved in collasion in Canadian waters, whether the U.S. law of damages applies or the Canadian law.

We feel that this bill in that respect would be of benefit to ship

owners.

There are two things about the bill I would like to point out. We feel that some provision should be made to strengthen the section of the bill-I believe it is section 7-which deals with your immunities under the Carriage of Goods by Sea Act and the Harter Act. I think if the Canadian provision were adopted or a provision similar to the Canadian it would be clearer.

Senator BARTLETT. That is on S. 2313?

Mr. ELDER. S. 2313, yes. The language of the Canadian act in that respect is as follows:

Nothing in this section affects the liability of any person under a contract of carriage or any contract or shall be construed as imposing any liability upon any person from which he is exempted by any contract or by any provision of law or as affecting the right of any person to limit his liability in the manner provided by law.

We feel that that would be a better provision than the present section 7.

One more thing with respect to this bill. We believe there should be a specific cutoff date-in other words, that this bill would become effective as to collisions occurring on or after a certain specific dateso that it does not affect litigation that might be in process at the time the bill is enacted.

Turning next to S. 2314, as I said before, we favor in principle the bill—that is, the concept of a limitation of amount based on a fixed dollar per ton.

As we construe the intent of the bill, it does not intend to prevent limitation in any instance which is already covered by present law.

I would like the privilege of asking that the record remain open for a few days. We would like to submit some written comments and some possible clarifying amendments to preserve that right.

Senator BARTLETT. We will be glad to accommodate your desires in that respect, because I think this would be most helpful to have you make a more extended statement.

Mr. ELDER. Thank you.

(The extension of remarks of Mr. Elder follows:)

SUBMISSION OF LAKE CARRIERS' ASSOCIATION, CLEVELAND, OHIO, RE S. 2313 AND S. 2314

Lake Carriers' Association, hereinafter referred to as "association", is an organization consisting of 28 vessel companies owning and operating in the aggregate 264 cargo vessels of U.S. flag engaged primarily in the transportation of iron ore, coal, limestone, grain, and petroleum products between ports on the Great Lakes. In all the vessels of association members transport about 95 percent of the total commerce of the Great Lakes which moves by Americanflag vessels. At times this commerce has totaled as much as 175 million tons in a single 8 months navigation season.

: During the hearings on S. 2313 and S. 2314 on March 2, 1962, Scott H. Elder appeared briefly on behalf of the association and stated its position with respect to these bills. His statement was to the effect that the association favored the principles of these bills but desired at a later date to file a supplemental statement suggesting certain amendments. The community of interest on the Great Lakes between the United States and Canada in matters of this kind leads the association to suggest that prime consideration be given to achieving the greatest possible uniformity with Canada. Accordingly, there are submitted herewith certain suggested amendments to S. 2313 and S. 2314 which in most respects would accomplish greater uniformity with Canada and also serve to clarify the bills.

COMMENTS WITH RESPECT TO S. 2313

The basic purpose of this bill, as we understand it, is to apportion liability arising out of cases of collision which are subject to the admiralty and maritime jurisdiction of the United States. Such being the case, it is suggested that the phrase "compensation due for damages caused" be deleted from lines 3 and 4 of page 1 and the phrase "liability to make good the resulting damage or loss" substituted so that the introductory paragraph of the bill would read: "That where a collision occurs between vessels the liability to make good the resulting damage or loss shall be settled in accordance with the following provisions, in whatever waters the collision takes place."

Concerning section 2 of S. 2313, the first sentence thereof deals with situations where either no fault exists or if it does exist the courts are unable to determine

it. Thus the sentence merely states well-founded principles of existing law. See The Jumna, (2 Cir.) 149 F. 171. Present law is clear that in a collision case there can be no recovery or partial recovery unless fault is affirmatively shown. The Clara, 102 U.S. 200; The Grace Girdler, 7 Wal. 196.

The second sentence of section 2 would eliminate all statutory presumptions of fault in regard to liability for collision. Presumably this sentence is aimed at the last sentence of section 1 of the Stand By Act (33 U.S.C.A. § 367). The Brussels Convention of 1910 provides in Article 6 that "There shall be no legal presumptions of fault in regard to liability for collision." The framers of the bill did not adopt this language and it is, therefore, presumed that the intent of section 2 is to eliminate statutory presumptions only, such as that found in the Stand By Act, but not legal or evidentiary presumptions such as the rule of The Pennsylvanian (86 U.S. 125). There are many examples of this latter type of presumption. For instance, the failure to produce a vessel's log books, unless sufficiently explained, raises an inference of fault. (The Philadelphia (3 Cir.), 44 F. 2d 1.) Similarly, there is a presumption of fault where a vessel fails to produce a principal witness although available to testify. (The New York 175 U.S. 187). A moving vessel which comes into collision with one at anchor is presumptively at fault and has the burden of exonerating herself from liability. (The Charles Hubbard (6 Cir.), 229 F. 352.) These presumptions do not cast a party in fault but merely place on him a duty to supply proof of his lack of fault. Such presumptions only excuse the injured party from making proof at the outset. Collision liability is still based on fault. (See Cranberry Creek Coal Co. v. Red Star Towing & Transp. Co. (2 Cir.), 33 F.2d 272; Cert. den. 280 U.S. 596). Presumptions are useful tools for determining which party has the burden of going forward with the evidence but they do not shift the burden of proof.

It should be noted that the comparable Canadian statute contains no provisions similar to section 2 of S. 23113. (See the Canada Shipping Act, 1934, §§ 648-657.) Since then, the second and third sentences of section 2 would modify certain legal presumptions, which presumably was not intended, it is the view of the association that the first sentence of section 2 only should be retained and the rest of the section deleted from the bill.

With respect to section 4 of S. 2313, it is believed that the first sentence of paragraph (a) thereof should be amended by inserting after the word "vessel” in line 8 the phrase "to make good the damage or loss" so that such paragraph would read as follows:

"(a) If two or more vessels are in fault the liability of each vessel to make good the damage or loss shall be in proportion to the degree their faults respectively contributed. If it is not possible to establish the degree of the respective faults, or if it appears that the faults are equal, the liability shall be apportioned equally."

In addition there should be added to section 4 a new paragraph (d) as follows: "(d) Nothing in this Act shall operate so as to render any vessel liable for any loss or damage to which her fault has not contributed."

It is urged that the above suggested amendments to section 4 would clarify the intended meaning of such section by indicating, first, that the bill deals only with apportionment of liability and, second, that the bill is not intended to cast a vessel in fault where, in fact, no fault exists. With respect to this latter point the suggested new paragraph (d) is of particular importance in view of the second sentence of paragraph (a) which might otherwise suggest that it is not always necessary to find a vessel at fault in order to hold her liable. This, of course, is not the intended meaning of paragraph (a). In addition such amendments to section 4 as are suggested above would bring that section more nearly in conformity with Canadian law (Canada Shipping Act. § 648).

The next section of concern to the association is section 7. Again the language of the bill does not appear to be adequate to convey its intended meaning. In this respect it is believed that the language of the Canadian statute, Canada Shipping Act, 1934, sections 648 and 649, is more appropriate. It is, therefore, suggested that the last sentence of section 7 repealing the presumption of the Stand By Act (33 U.S.C.A. sec. 367) be enacted as a separate new section 13 and section 7 rewritten to read as follows:

"The provisions of this Act shall not affect the liability of any person under a contract of carriage or any contract; nor shall such provisions be construed as imposing any liability upon any person from which he is exempted by any

contract or by any provision of law, or as affecting the right of any person to limit his liability in the manner provded by law; nor shall this Act be construed as depriving any person of any right of defense on which, independently of this Act, he might have relied in an action brought against him by any person or persons entitled to sue in respect of any damage or loss caused by a vessel on navigable water."

On the basis of sections 9 and 10 it is apparent that the bill is intended to apportion liability in all cases of damage or loss caused by a vessel on navigable water. In so doing, the bill follows the analogy of the act of June 19, 1948, extending the admiralty and maritime jurisdiction of the United States (46 U.S.C.A. sec. 740). In order to clarify the bill in this respect it is believed section 9 should be deleted in its entirety and section 10 amended so that said section 10 would read as follows:

"This Act shall apply to the liability to make good the damage or loss caused by a vessel on navigable water and to which the admiralty and maritime jurisdiction of the United States has been extended notwithstanding such damage or loss is done or consummated on land. In such cases the liability to make good the damages or losses in proportion to the degree of the faults respectively committed shall apply in the same manner between any vessel or vessels and the owners or operators of any land structure, facility or other property as the rule is applied between vessels."

In reviewing S. 2313 the substitute language proposed during the course of the hearings on March 1, 1962, was carefully studied. If, however, the amendments suggested above are adopted the numerous changes suggested during the course of the hearings would seem to be unnecessary. Further, the substitute language submitted at that time represents a considerable variance from the Brussels Convention of 1910, particularly in the use of the term "casualty" rather than collision. In the interest of achieving the greatest possible uniformity with Canadian law for the Great Lakes, the association urges that the amendments to S. 2313 suggested above be adopted in lieu of the substitute language proposed during the course of the hearings.

COMMENTS WITH RESPECT TO S. 2314

It is understood that the primary purpose of this bill is to provide a limitation fund in all instances based upon a fixed amount determined according to the vessel's tonnage. It is intended neither to broaden nor to narrow the shipowner's right to limit liability as that right exists under present law (46 U.S.C.A. 183).

on

In examining subsection A of section 2 it is found that the last sentence of paragraph 2 is unduly restrictive. That sentence could be construed to mean that the shipowner would not have the right to limit liability where damage is occasioned by the act, neglect or default of any person shore for whom the owner is responsible unless that person's act relates to the navigation or management of the ship. This reference in the proposed bill to navigation or management of the ship would in all probability be construed as having the same meaning as under the Carriage of Goods by Sea Act (46 U.S.C.A. 1300-1315) or the Harter Act (46 U.S.C.A. 190-195). As used in these acts the phrase is very narrow of meaning, particularly with respect to the term "management," which has always been confined to sitautions arising after a vessel has been outfitted for a voyage. Thus it was held in The J. L. Luckenbach (D.C. S.D. N.Y., 1 F. Supp. 692, affirmed (2 Cir.) 65 F. 2d 570), that the breaking of a pipe occurring before the inception of a voyage was not mismanagement whereas it would be if it occurred on the voyage. Distinctions such as this have no place in a law limiting liability. Such a restriction is unwarranted by the purpose of the bill and it is, therefore, urged that the last sentence of paragraph 2 of subsection A of section 2 beginning on line 3 of page 3 of the bill be deleted in its entirety.

Subsection B of section 2 purports to save to shipowners the right to limit liability in instances where liability arises without proof of negligence as is the case where the shipowner's warranty of seaworthiness is breached. Under existing law such a warranty is sometimes implied in the shipowner's own personal contract in which event he is not permitted to limit liability (Cullen Fuel Co. v. W. E. Hedger, Inc., 290 U.S. 82). The shipowner may, however, specifically contract for the right to limit liability in such instances. The Yungav (D.C. S.D. N.Y., 58 F. 2d 352). This principle ought to be preserved and, therefore, it

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