Dixilyn Drilling Corp. v. Crescent Towing & Salvage Co.

Background

A towing company contracted to pull a barge called the Julie Ann down the Mississippi River. While being towed, the barge hit a bridge. The bridge owners sued both the towing company and the barge owner. The two paid the bridge claim together but kept fighting each other about who should actually bear the loss. After a full trial, the district judge found the towboat was solely negligent and decided the barge owner had not agreed to cover damages caused by the towing company’s own negligence.

Reasoning

On appeal, the Court of Appeals said it did not need to decide who was at fault because the towage contract, in its view, made the barge owner assume all losses arising from the tow. The Supreme Court disagreed. It said that holding such an agreement valid would conflict with earlier decisions that do not allow contracts to exempt a party from liability for its own negligence. The Court explained that a prior related case about a shipping tariff and a regulatory agency did not apply here. The Supreme Court therefore reversed the appeals court’s judgment and sent the case back for further proceedings.

Real world impact

The decision prevents enforcement of contract clauses that would make a barge owner pay for damage caused by the towboat’s own careless acts. It reinforces earlier rulings protecting parties from broadly worded exculpatory terms in towage contracts. The case is returned to the appeals court to deal with other questions left open by this ruling.

Dissents or concurrances

A Justice wrote separately saying he would prefer to reconsider the earlier rule but joined the Court’s opinion to preserve certainty in commercial law.