Boston Metals Co. v. the Winding Gulf

Background

A metals company owned an old destroyer that sank after colliding with the steamship Winding Gulf while it was being towed by the tug Peter Moran. The towed ship had no power or crew aboard to tend its lights. The District Court found negligent navigation by the Winding Gulf and fault in the destroyer’s lights, but imputed the tug master’s negligence to the tow owner because the towage contract said the tug’s crew would "become the servants" of the tow and that the towing company would not be responsible; damages were divided and the Court of Appeals affirmed.

Reasoning

The central question was whether a towage contract can make the owner of the towed vessel directly liable to third parties for the negligence of the towing company’s employees. The Court, relying on its decision in Bisso v. Inland Waterways Corp., held the persons operating the tug were employees of the towing company, not employees of the tow owner, and therefore it was error to impute that negligence to the tow owner. The Supreme Court reversed the lower courts.

Real world impact

The ruling means third parties injured by a tug’s negligence generally cannot bypass the tug or towing company and sue the owner of the vessel being towed simply because of a towage clause. Companies that hire tugs should expect liability to remain with the towing company unless contract language unmistakably and decisively shifts it. This decision controls the present dispute and limits imputed liability under similar contracts.

Dissents or concurrances

Justice Burton dissented, saying the clause should be given full effect and make the tow owner directly liable because the contract declared the tug’s crew to be the tow’s servants. Justice Frankfurter concurred, stressing that only clear, decisive language should impose such direct liability.