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FINLEY v. UNITED STATES

February 18, 1955

Thomas FINLEY, Libelant,
v.
UNITED STATES of America, Respondent. UNITED STATES of America, Third-Party Libelant, v. TODD SHIPYARDS CORPORATION, Third-Party Respondent



The opinion of the court was delivered by: MODARELLI

MONDARELLI, District Judge.

On April 16, 1951, Thomas Finley, a resident of New Jersey, filed in this court a libel against the United States for the recovery of damages allegedly resulting from personal injuries sustained on May 19, 1947, while employed by Todd Shipyards Corporation as a welder in one of the tanks aboard the S.S. Neosho moored at Todd's yard in Hoboken, New Jersey. Finley alleged he was injured 'by reason of the * * * negligence of the respondent, its servants, agents and employees by reason of the unseaworthy condition of the * * * vessel and its appliances, in that the respondent failed * * * to provide the libelant with a reasonably safe place wherein to work, and more particularly in that the vessel was unseaworthy by reason of the * * * negligent and unsafe manner in which certain oils, gasoline or gasses were allowed to accumulate, which suddenly burned and exploded.' It is undisputed that the Neosho was a vessel owned by the United States.

 The action was brought pursuant to the so-called Suits in Admiralty Act of March 9, 1920, as amended, 46 U.S.C.A. §§ 741-745 and the Public Vessels Act of March 3, 1925, 46 U.S.C.A. § 781 et seq.

 This suit was preceded by other litigation commenced by Finley based on the same facts involved in this suit. On November 30, 1949, Finley filed a civil action in a New York State court against the Marine Transport Lines, Inc., the general agent employed by the United States to perform certain shoreside husbanding services in connection with the Neosho. That action was removed to the United States District Court for the Southern District of New York, which on the authority of Cosmopolitan Shipping Co., Inc., v. McAllister, 337 U.S. 783, 69 S. Ct. 1317, 93 L. Ed. 1692, dismissed the complaint on October 30, 1950. Finley filed the libel at bar allegedly pursuant to the provisions of 46 U.S.C.A. § 745, as amended, which extended the time within which certain suits in admiralty could be brought. Although the issue is not now before the court, the United States in an amendment to its answer has denied Finley's allegation that he is entitled to bring this action, arguing that neither the action against Marine Transport nor a prior libel against the United States pursuant to the Suits in Admiralty Act were timely commenced as is required by that Act.

 We are now concerned with a motion to dismiss an impleader action. The motion is by the impleaded-respondent, Todd, a New York corporation doing business at Hoboken, New Jersey, brought into the suit by an order entered on June 4, 1954, granting the United States' petition to implead filed on May 25, 1954, under Admiralty Rule 56, 28 U.S.C.A., relating to the 'right to bring in party jointly liable.' Todd also moves, in the alternative if its motion to dismiss is denied, to implead its subcontractor, Guardino & Sons, Inc.

 On or about January 1, 1946, the United States and Todd entered into a contract to reconvert the Neosho from a naval tanker to a merchant tanker. At the time of his injuries, Finley was an employee of Todd carrying out some of the work to be done pursuant to that contract. The impleader petition alleges that (1) if the United States is held liable to Finley, Todd is liable to the United States on its indemnity provision in the contract, *fn1" (2) Todd also agreed to exercise reasonable care in its work and to protect the Neosho from fire and other damage, which it failed to do, thereby causing Finley's alleged injuries, (3) if as alleged by Finley, the Neosho was unseaworthy, it was due to the conduct of Todd's employees, and (4) the active negligence of Todd caused Finley's alleged injuries, the alleged negligence of the United States having been merely passive.

 The United States and Todd have submitted a total of six briefs. In support of its motion to dismiss the impleader action, Todd argues: (1) Laches bars the impleader in that when Finley filed his libel against the United States, the 'alleged contract of indemnification was in effect and the respondent was legally chargeable with * * * the contents thereof,' and it had on that date (April 16, 1951) all of the rights not asserted by it until over 37 months later; during that period Todd was not a party in the litigation so that 'it was unable to take any steps to preserve vital testimony of its employees and servants, having charge of the work of converting the * * * Neosho at the time when Finley sustained his injuries'; (2) the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. §§ 901-950, sets forth the employer's liability 'exclusive of all other liability to the injured employee and anyone otherwise entitled to recover damages from the employer, because of injuries sustained by the employee'; and (3) the United States has no right to contribution or indemnification from Todd.

 The United States argues: (1) The impleader is timely in that Admiralty Rule 56, 28 U.S.C.A., permits it even 'at any later time during the progress of the cause that the court may allow'; (2) the doctrine of laches does not apply in that at the present time Todd cannot show prejudice because the six-year statute of limitation pertaining to contracts does not bar an action by the United States based on Todd's indemnity promise until six years subsequent to the date on which the United States is found liable to Finley; (3) the Longshoremen's and Harbor Workers' Compensation Act does not preclude this impleader; and (4) if Finley's injuries occurred because a cofferdam *fn2" in which he was working was not gas free, then the explosion was caused by the negligence of Todd, since Todd had agreed to gas free the vessel before allowing any of its employees to enter the tanks or cofferdams of the vessel.

 As to argument (1) by the United States, while the impleader procedurally is timely, Rule 56 does not eliminate the right of an impleaded-respondent to invoke defenses in a motion to dismiss. Since the court considers its answer to the laches question to be dispositive of this motion, the remaining arguments will not be discussed.

 Aside from the question of a substantive showing of laches, is laches applicable in this impleader action brought by a contract indemnitee against its indemnitor whose indemnity promise is contained in a contract to convert a vessel and the main action is a libel in admiralty against that indemnitee? No. question has been raised as to whether laches can be applied against the soverign in this case. See the discussion of the problem in The New Windsor, 5 Cir., 13 F.2d 925, affirmed, United States v. Jacksonville Forwarding Co., 18 F.2d 39; The No. 34, 1 Cir., 13 F.2d 927.

 Although counsel for the United States has not clearly stated the argument, if the contract between the United States and Todd and the indemnity provision therein are not maritime in nature, then the impleader action by the United States would be a common law contract action, laches would not apply and the six-year statute of limitation on contract actions would apply. Moreover, the proper characterization of this contract and its indemnity provision are necessary because 'It has been a subject of controversy whether a petition under the 56th Rule may be based upon a claim of recovery which would not sustain an independent action in admiralty or, in other words, whether the nonmaritime character of the third party's obligation, when considered in itself, debars the admiralty court from bringing such third party before it to respond to the principal obligation which is maritime.' Benedict on Admiralty, 6th Ed., Vol. II, Section 350, page 537.

 (a) Is the contract to convert the vessel maritime? (b) If it is, nevertheless, ought the court sever the indemnity provision? and (c) Is that provision maritime?

 MacDonald v. United States, D.C., 79 F.Supp. 953, held that a contract to convert a dry cargo vessel into a mule carrier is a maritime contract so as to allow the contractor to be impleaded in a personal injury action against the shipowner who alleged in the impleader that under the contract he had a right to indemnity. In that case, as in the case at bar, the libelant was an employee of the impleaded-respondent who allegedly had been injured aboard a vessel owned and operated by the United States, and there as here, the United States and the employer-impleaded-respondent had contracted to convert the vessel. In the MacDonald case the court rejected the argument that the contract was not maritime, saying:

 '* * * citation of authority is surely unnecessary on the point that a contract to convert a vessel is a maritime contract. The traditional test is, of course, whether the agreement has to do with the business, commerce, or navigation of the sea. There has been some difficulty about some so-called 'mixed contracts'. The better opinion seems to be that if the maritime feature of the agreement is the dominant feature, then admiralty will take jurisdiction. But I have never seen it suggested that a contract to convert a ship is nonmaritime.' 79 F.Supp. at page 954.

 American Stevedores, Inc., v. Porello, 330 U.S. 446, 67 S. Ct. 847, 91 L. Ed. 1011, was a case in which a longshoreman was injured while on board a United States vessel. He was an employee of a stevedoring company which was loading the vessel under a stevedoring contract with the United States. He filed a libel against the United States which impleaded the company charging it with fault and setting forth an indemnity provision of the stevedoring contract. In the Supreme Court, the impleaded company argued that the court below as an admiralty court did not have jurisdiction of the indemnity provision of the stevedoring contract, and that, therefore, the decree granting full indemnity to the United States from the company was beyond the court's power. The Supreme Court, in holding that a stevedoring contract is maritime, refused to sever the contract provision for indemnity for damages arising out of the performance of wholly maritime activities because it 'would only needlessly multiply litigation. Such a provision is a normal clause in contracts to act for others and no more determines the nature of a contract than do conditions on the time and place of payment.' 330 U.S. at page 456, 67 S. Ct. at page 853.


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