350 U.S. 124, 76 S. Ct. 232, 100 L. Ed. 133 (1956)
In 1949, respondent Pan-Atlantic Steamship Corporation operated the SS. Canton Victory in the American coastwise trade under a bareboat charter.1 Petitioner Ryan Stevedoring Co., Inc. agreed, as evidenced by letters without a formal contract or express indemnity agreement, to perform all stevedoring operations required by respondent in its coastwise service.2 Pursuant to that agreement, petitioner loaded the Canton Victory at Georgetown, South Carolina, with mixed cargo including rolls of pulpboard 4 feet wide and 3 to 5 feet long.3 Petitioner stowed some of these rolls side-by-side on the floor of Hatch No. 3 and “nested” others above them by placing the upper rolls in the troughs between the lower ones.4 To immobilize the rolls, it was necessary to secure or “chock” the bottom tier with wedges or with miscellaneous pieces of wood known as “dunnage.”5
Respondent’s cargo officers supervised the loading of the entire ship and had authority to reject unsafe stowage.6 A few days later, on July 20, 1949, in navigable water at a pier in Brooklyn, New York, petitioner engaged in unloading these rolls.7 While one of petitioner’s Brooklyn longshoremen, Frank Palazzolo, was working in Hatch No. 3, one roll, weighing about 3,200 pounds, broke loose from the others, struck him violently and severely injured his left leg.8 There is no evidence that he was negligent, but the rolls had been insufficiently secured when stowed by petitioner in Georgetown.9
Petitioner’s insurance carrier under the Longshoremen’s Act paid Palazzolo $2,940 compensation and furnished him medical services costing $9,857.36, all without any formal award by the Deputy Commissioner.10 As permitted by § 33 of that Act, Palazzolo sued the respondent-shipowner in the Supreme Court of New York.11 The shipowner removed the case to the United States District Court for the Eastern District of New York and filed a third-party complaint against petitioner.12 By stipulation, Palazzolo’s case against the shipowner was tried to a jury, which returned a verdict in his favor for $75,000.13 Also by stipulation, the shipowner’s third-party complaint was submitted on the same record to the judge who had presided over Palazzolo’s case, who dismissed the complaint.14
The Court of Appeals affirmed Palazzolo’s judgment but reversed the dismissal of the third-party complaint and directed that judgment be entered for the shipowner.15 The Supreme Court granted certiorari because of the wide application of the case and the conflicting views that have been expressed on the issues.16 The judgment was affirmed by an equally divided Court, 349 U. S. 901, but the case was restored to the docket for reargument before a full Court, 349 U. S. 926.17
Whether the Longshoremen’s and Harbor Workers’ Compensation Act precludes a shipowner from asserting a stevedoring contractor’s liability to reimburse it for damages paid to the contractor’s injured longshoreman?18
Section 5 of the Longshoremen’s and Harbor Workers’ Compensation Act makes the employer's liability to the employee exclusive and in place of all other liability to the employee or anyone entitled to recover damages from the employer on account of the injury.19 However, this exclusivity does not bar a shipowner's independent contractual indemnity claim against the stevedoring contractor.20
No. The exclusivity provision applies only to claims by the employee or those claiming through the employee on account of the injury.21 The shipowner's third-party complaint seeks reimbursement based on the stevedoring contractor's breach of its contractual obligation to stow cargo safely, which constitutes an independent contractual right preserved by the Act.22 Ryan Stevedoring Co. agreed to perform all stevedoring operations for Pan-Atlantic Steamship Corp. on the Canton Victory.23 Palazzolo sued the shipowner for the injuries caused by unsafe stowage.24
The shipowner impleaded the contractor for reimbursement of the resulting judgment.25
The Longshoremen’s and Harbor Workers’ Compensation Act does not preclude the shipowner from asserting the stevedoring contractor’s liability to reimburse it for damages paid to the injured longshoreman.26
Related opinions on this issue
Joined by The Chief Justice, Mr. Justice Douglas, And Mr. Justice Clark
Justice Black, joined by the Chief Justice, Justice Douglas, and Justice Clark, dissented on the ground that the holding requires the employer to pay far more than the compensation provided by the Act on account of an injury to its employee.27 He emphasized that the shipowner's claim was for common-law indemnity rather than contractual.28 The evidence showed the shipowner's officers actively participated in and supervised the stowage, making them joint tortfeasors.29
Black argued that allowing such recovery undermines the Act's balance of limited liability for employers in exchange for no-fault compensation to employees.30
Whether a stevedoring contractor is obligated to reimburse a shipowner for damages caused by the contractor’s improper stowage of cargo in the absence of an express agreement of indemnity?31
A stevedoring contractor that agrees to perform a shipowner's stevedoring operations assumes an obligation to stow the cargo in a reasonably safe manner as part of its warranty of workmanlike service.32 This obligates the contractor to reimburse the shipowner for damages caused by improper stowage even absent an express indemnity agreement.33
Yes. The contractor's agreement to perform the stevedoring necessarily encompasses the duty to stow properly and safely as an essential element of the service undertaken.34 Ryan Stevedoring Co. agreed to load the Canton Victory at Georgetown with pulpboard rolls.35 It stowed them using only inadequate dunnage rather than proper wedges or chocks.36
This unsafe stowage caused the roll to break loose and injure Palazzolo during unloading in Brooklyn.37 This led to the shipowner's $75,000 liability.38 The contractor cannot rely on the shipowner's failure to discover and correct the breach as a defense to its own warranty obligation.39
A stevedoring contractor is obligated to reimburse a shipowner for damages caused by the contractor’s improper stowage of cargo even in the absence of an express agreement of indemnity.40
Related opinions on this issue
Joined by The Chief Justice, Mr. Justice Douglas, And Mr. Justice Clark
Justice Black dissented that there was not the slightest support in the record for finding that the stevedore voluntarily agreed to give up the limited liability the Act was designed to afford.41 He noted that the memorandums contained only a simple agreement to do the stevedoring for compensation with nothing from which it could be inferred that Ryan would indemnify the shipowner.42 The shipowner's counsel stipulated the action was based on common-law indemnity rather than contract.43
Black concluded that the Court was improperly creating an indemnity contract from the mere agreement to perform the work.44