W. E. Hedger Transp. Corp. v. Gallotta

The appellant, Hedger Company, in a proceeding brought under the 51st Admiralty Rule, 28 U.S.C.A. following section 723, to limit its liability as a shipowner, appeals from an order denying a motion to reinstate a stay of an action for personal injuries, brought by the appellee, Gallotta, in the state court. The facts upon which the decision depended were as follows. The Hedger Company owned the barge, "M. A. Lenahan," which it chartered orally to the appellant, Manhattan Lighterage Company, and which that company subchartered to a company, called the Commodity Credit Company. Gallotta was a longshoreman; he worked on the barge while it was in the possession of the subcharterer, fell into the hold, and was injured. He sued the Hedger Company in the state court on the ground that the barge was defective, demanding $25,000. The Hedger Company filed a petition in the District Court to limit its liability to $7000, the alleged value of the barge; and in the proceeding Gallotta filed a consent to the limitation of liability, and agreed that the value of the barge should be fixed in the admiralty court. That court thereupon vacated a stay of Gallottas action which the Hedger Company had procured when it filed its original petition. Shortly thereafter, Gallotta joined the Manhattan Company and the Commodity Credit Company as defendants in his action, charging them also with responsibility for the condition of the barge. The Commodity Credit Corporation moved to dismiss the action as against it, and succeeded; the Manhattan Company answered and filed a cross-claim against the Hedger Company, seeking to recover upon the breach of the Hedger Companys covenant of seaworthiness implied in the oral charter. The Hedger Company then moved in the limitation proceeding to vacate the order dissolving the stay of Gallottas action, upon the ground that the cross-claim of the Manhattan Company constituted a second claim against it; thereby created the situation for which the limitation proceeding was intended; and thus made it necessary to bring the two claims into concourse, and to adjudicate them in the admiralty court. The judge denied this motion, but declared that the order should not be construed to permit the Manhattan Company to litigate its claim against the Hedger Company outside the limitation proceedings. The Hedger Company and the Manhattan Company then appealed.