BISSO v. INLAND WATERWAYS CORP.

MR. JUSTICE BLACK delivered the opinion of the Court.

The question presented is whether a towboat may validly contract against all liability for its own negligent towage. Since there is no controlling statute the question must be decided as a part of the judicially created admiralty law. Federal courts have disagreed as to whether there is or should be a judicial rule invalidating such contracts. Calling attention to this uncertainty, the District Court, sitting in admiralty, sustained a contractual provision exempting respondent towboat owner from liability for negligence and entered judgment accordingly. 114 F.Supp. 713. The Court of Appeals affirmed. 211 F.2d 401. We granted certiorari to settle the question. 348 U.S. 811.

The record including the findings of fact shows: Petitioner's oil barge Bisso while being towed up the Mississippi River by the respondent's steam towboat Cairo collided with a bridge pier and sank. At the time, the barge had no motive power, steering apparatus, officers or crew, its movements being completely controlled by the Cairo. Negligent towage by those operating the Cairo caused the collision. Consequently, respondent, owner of the Cairo, would have been required to pay petitioner damages unless relieved of liability by certain clauses in the towage contract. One provides that the towing movement should be at the "sole risk" of the barge, and a second provides that masters, crews and employees of the towboat Cairo should "in the performance of said service, become and be the servants" of the barge Bisso. The Court of Appeals construed both these clauses as relieving respondent from liability for its negligence and held both valid.

A release-from-liability clause in a towage contract was first considered by this Court in 1871 in The Steamer Syracuse, 12 Wall. 167. There negligent towage by the Syracuse damaged a canal-boat being towed. To escape liability owners of the towboat relied on a contractual agreement that "the canal-boat was being towed at her own risk." Notwithstanding the agreement, this Court held that the towboat "must be visited with the consequences" of its negligence.1 For many years The Syracuse seems to have been generally accepted as either (1) construing a contract to "tow at own risk" as not including an exemption from negligence, or (2) holding invalid as against public policy a contract which exempts a tower from his negligence.2

In 1909 The Syracuse was repudiated by the Second Circuit in The Oceanica, 170 F. 893. That court construed a contract requiring a towed vessel to "assume all risks" as exempting the tower from responsibility for its negligence; it also held, over strong dissent, that the contract was not invalid as against public policy. And on rehearing the court conceded that "the decision of the majority of the court as to the right of a tug to contract against her own negligence is a departure from previous decisions." The court went on to express hope that the question would "be set at rest in this case by the Supreme Court." Certiorari was denied,3 however, and courts in the Second Circuit continued to follow the newly announced Oceanica doctrine.4 But other circuits continued to refuse to allow towboats by contract to escape liability for their negligent towage.5

It was in that state of intercircuit conflict that this Court again, in 1928, considered the effect of a contract claimed to exempt a towboat from its negligence. The Wash Gray, 277 U.S. 66.6 The contract involved provided that the towboat should not be "responsible in any way for loss or damage" to the Wash Gray, the vessel being towed. This Court was urged to follow The Oceanica. But counsel for the Wash Gray, relying on The Syracuse, insisted that recovery for "actionable negligence is not barred by release in contract for towage."7 Without mention of The Oceanica this Court said: "We do not think that the towing contract has the effect claimed for it by the companies. It did not release the [towboat] . . . from any loss or damage to the `Wash Gray' due to the negligence of the master or crew of the towing vessel . . . . The rule laid down by this Court in The Steamer Syracuse . . . covers the point." 277 U. S., at 73. The contracts in The Syracuse and The Wash Gray were worded quite differently, and there is little indication that the "rule" the Court had in mind was one of mere contractual interpretation. Rather a public policy objection to such contracts was indicated by the Court's quoting from that part of The Syracuse opinion which pointed out that despite the contract there the towboat had to bear the consequences of its negligence even though the law had not imposed on it the obligations resting on a common carrier.8

It is nevertheless argued that The Syracuse and The Wash Gray did not announce a rule of public policy against release-from-negligence contracts but decided no more than what the towage contracts in those cases meant. Strong arguments can be made in support of this contention but we think stronger arguments can be made against it. The Syracuse was decided in an era of manifest judicial hostility toward release-from-negligence contracts, particularly those made by businesses dealing widely with the public and having potential monopolistic powers.9 That hostility caused this Court two years later to declare that public policy forbade common carriers to make such contracts.10 The next year telegraph company contracts were brought under the same ban although the Court stated they were not common carriers.11 Largely because of this general judicial attitude and the influence of The Syracuse no towage release-from-negligence clause appears to have been enforced by any court for 38 years. During that period and later enforcement was refused in two ways—either by giving such contracts a very narrow construction or by holding them to be against public policy. One court even expressly declared it to be "contrary to public policy to so construe" a contract that a tower could be allowed to go clear of all liability for his own negligence.12 When the Second Circuit belatedly departed from The Syracuse other courts still refused to enforce towers' stipulations against their negligence. And when this Court was urged in The Wash Gray to repudiate The Syracuse by following The Oceanica the answer was an emphatic reiteration and approval of the language and holding of The Syracuse. Viewed in light of this history, we think The Syracuse, The Wash Gray and intervening lower court cases together strongly point to the existence of a judicial rule, based on public policy, invalidating contracts releasing towers from all liability for their negligence.13 Because of this judicial history and cogent reasons in support of a rule outlawing such contracts we now, despite past uncertainty and difference among the circuits, accept this as the controlling rule.

This rule is merely a particular application to the towage business of a general rule long used by courts and legislatures to prevent enforcement of release-from-negligence contracts in many relationships such as bailors and bailees,14 employers and employees,15 public service companies and their customers.16 The two main reasons for the creation and application of the rule have been (1) to discourage negligence by making wrongdoers pay damages, and (2) to protect those in need of goods or services from being overreached by others who have power to drive hard bargains.17 These two reasons are no less applicable today than when The Syracuse and The Wash Gray were decided. And both reasons apply with equal force whether tugs operate as common carriers or contract carriers.18 The dangers of modern machines make it all the more necessary that negligence be discouraged. And increased maritime traffic of today makes it not less but more important that vessels in American ports be able to obtain towage free of monopolistic compulsions.

The practical result of leaving towers wholly free to contract against all liability for their negligence is strikingly illustrated in an English case. The Port of London controlled and operated all tugs in the harbor and by law no ship could enter without the aid of Port Authority tugs. But no shipowner could get a Port tug unless he first signed a contract agreeing to be liable for all damages caused by the negligence of the tug's employees. Under such a contract the court allowed the Port Authority to recover damages from a ship towed for injuries to the Port's tug caused by negligence of the Port's employees running the tug.19 Such a result would be impossible under the rule we accept as controlling.

It is contended that the towage contract rule we have accepted was rejected by this Court in Sun Oil Co. v. Dalzell Towing Co., 287 U.S. 291.20 We disagree. Unlike The Syracuse, The Wash Gray and the instant case, Sun Oil did not involve a contract designed to relieve a towboat owner from liability for negligent towage. The contractual clause there involved related only to pilotage. The clause provided that a tug captain who piloted a vessel propelled on its own power should be considered the servant of that vessel and that the tug owners should not be liable for his negligent pilotage.21 Sun Oil construed this contract as relieving the tugboat owners from all liability for negligence of the tug captain while piloting Sun Oil's vessel and held the contract valid as thus construed. But both the Court of Appeals22 and this Court recognized that holding the pilotage contract valid did not conflict with The Syracuse or The Wash Gray. Indeed, this Court expressly stated that the Sun Oil decree was "not in conflict with the decisions" in The Syracuse and The Wash Gray. It is of course possible that the Court found an absence of conflict in the cases because of a different construction given the different contracts involved. We doubt this, but however this may be there are more basic differences upon which we prefer to rest this Court's statement that Sun Oil did not conflict with the two prior cases.

There are distinctions between a pilotage and a towage exemption clause which make it entirely reasonable to hold one valid and the other invalid. A pilotage clause exempts for the negligence of pilots only; a towage clause exempts from all negligence of all towage employees. Pilots hold a unique position in the maritime world and have been regulated extensively both by the States and Federal Government.23 Some state laws make them public officers, chiefly responsible to the State, not to any private employer. Under law and custom they have an independence wholly incompatible with the general obligations of obedience normally owed by an employee to his employer.24 Their fees are fixed by law and their charges must not be discriminatory. As a rule no employer, no person, can tell them how to perform their pilotage duties. When the law does not prescribe their duties, pilots are usually free to act on their own best judgment while engaged in piloting a vessel. Because of these differences between pilots and towage employees generally, contracts stipulating against a pilot's negligence cannot be likened to contracts stipulating against towers' negligence. It is one thing to permit a company to exempt itself from liability for the negligence of a licensed pilot navigating another company's vessel on that vessel's own power. That was the Sun Oil case. It is quite a different thing, however, to permit a towing company to exempt itself by contract from all liability for its own employees' negligent towage of a vessel. Thus, holding the pilotage contract valid in the Sun Oil case in no way conflicts with the rule against permitting towers by contract wholly to escape liability for their own negligent towing. That rule renders invalid the first provision of the contract in this case that the towing had to be done at the sole risk of the towed vessel.

The second clause in the contract—that the employees of the towboat Cairo should be servants of the barge Bisso—likewise cannot be enforced. For if valid, the only effect of that clause would be to shift all liability for negligent towage from the towboat to the vessel being towed, precisely what the first clause attempted to do. This is true because employees of a towboat do not become employees of a vessel being towed just because a contract says so, when as here the workers are in truth and in fact solely employees of the towboat.25 This towboat belonged to respondent. It was manned by workers hired and paid by respondent. They remained at all times subject to respondent's complete control. In contrast, the owners of the barge being towed never had any relationship of any kind or character with those who controlled and operated the towboat. The rule against contractual exemption of a towboat from responsibility for its own negligence cannot be defeated by the simple expedient of providing in a contract that all employees of a towboat shall be employees of the towed vessel when the latter "employment" is purely a fiction.

Reversed.

MR. JUSTICE HARLAN took no part in the consideration or decision of this case.

MR. JUSTICE DOUGLAS, concurring.*

I join in the opinion of the Court. I do not think we know enough about the economics and organization of this business1 to change the established rule of The Steamer Syracuse, 12 Wall. 167, 171, and The Wash Gray, 277 U.S. 66, 73, that a tug may not contract against her own negligence.

I agree with the Court that Sun Oil Co. v. Dalzell Towing Co., 287 U.S. 291, was not a departure from that rule. In that case the vessel which was being assisted by the tugs was under her own power and was manned by her own crew. The negligence was that of a tug captain on board the vessel under tow. The Court enforced the contract, which made his negligence the negligence of the vessel, under the familiar rule that "when one puts his employee at the disposal and under the direction of another for the performance of service for the latter, such employee while so engaged acts directly for and is to be deemed the employee of the latter and not of the former." Id., at 295.

In the Sun Oil case, the tug was not a common carrier or a contract carrier. It was merely assisting a vessel under her own power. Here we are dealing with dead tows, where the tug and the tug alone is in control, where the tows are without power and without crews.

In that situation, the tugboats are common carriers2 when they so hold themselves out (Stimson Lumber Co. v. Kuykendall, 275 U.S. 207; Cornell Steamboat Co. v. United States, 321 U.S. 634) or contract carriers.

So far as we know, the tugboats in the present cases are as much common carriers as the tugboats in the Cornell Steamboat case and the Stimson Lumber Co. case.

Common carriers may not "by any form of agreement secure exemption from liability for loss or damage caused by their own negligence." Sun Oil Co. v. Dalzell Towing Co., supra, at 294. See Railroad Co. v. Lockwood, 17 Wall. 357; Liverpool Steam Co. v. Phenix Ins. Co., 129 U.S. 397. The reasons are as germane to a tugboat that is a contract carrier as they are to a tugboat that is a common carrier. They were well stated by Judge Coxe, dissenting in The Oceanica, 170 F. 893, 896:

If the tug is only a contract carrier, it is not liable for injury to the tow in the absence of negligence. See Stevens v. The White City, 285 U.S. 195. But though a contract carrier, the tug may as effectively command the market and have as complete control of the tow and cargo as any common carrier. The reasons stated by Judge Coxe seem, therefore, as germane to the contract carrier as to the common carrier.

It may be that the rule of The Syracuse is outmoded and should be changed. It may be that the tugboat industry is less able to carry the risks of those losses than its customers. It may be fairer in the long run to let the tugboat operator free himself from his own negligence and transfer the liability to the shippers who employ his services. But the very statement of the problem raises large questions of policy on which the present records throw no light. We would have to know much more about the economics and organization of the tugboat industry than we are offered here to fashion a new rule.3 Accordingly, I would continue to enforce the established rule of The Syracuse that has its roots deep in history and experience, until and unless Congress adopts another one.

MR. JUSTICE FRANKFURTER, whom MR. JUSTICE REED and MR. JUSTICE BURTON join, dissenting.

Drawing on its constitutional powers in matters maritime (Art. III, § 2), this Court has probably made as much substantive admiralty law through adjudication as has Congress by legislation. Indeed, not a little of legislation has displaced or modified the Court's decisions. This creative judicial function of making admiralty law remains unimpaired, so that it is within the Court's jurisdiction now to announce, as new doctrine, that tow and tug may not by agreement relieve the tug of liability for damage to the tow caused by the tug's negligence. Of course, the Court should not restrict the area of full bargaining between tow and tug unless an overriding public interest calls for such restriction.

But the Court does not now profess to originate a doctrine of invalidity of such an agreement. Pervading the Court's opinion is the assumption that it is merely making explicit what has been the presupposition and direction, if not the unequivocal pronouncement, of the controlling body of decisions. These decisions, we are told, "strongly point to the existence of a judicial rule, based on public policy, invalidating contracts releasing towers from all liability for their negligence." On this assumption, one easily slides to the Court's conclusion. Such an assumption almost implies the conclusion, for a long-established rule, not remotely related to any constitutional question and readily amenable to legislative change, should be adhered to. Especially in the domain of commercial affairs, stare decisis has a strong social justification. In conducting their affairs, men naturally assume that courts will not unsettle a settled rule for the conduct of business, certainly not unless experience has made manifest the need for overturning the law.

To assert that a rule has been established by courts necessarily implies authoritative pronouncement of a doctrine, its application to litigation, and its continuing vitality. Such a rule ought to be found in adjudications in this Court or at the very least—in the case of maritime matters—in the weight of authority in lower courts, particularly in the Southern District of New York where admiralty law has to such a large extent developed. The claimed rule cannot avouch the decisions in this Court nor the body of lower court decisions. In their entirety, the decisions reflect the opposite. A critical examination of them yields these conclusions:

The materials on which these conclusions are based are not esoteric. They are to be assessed, of course, according to time-honored rules for reading cases—that cases hold only what they decide, not what slipshod or ignorant headnote writers state them to decide; that decisions are one thing, gratuitous remarks another. A stew may be a delicious dish. But a stew is not to be made in law by throwing together indiscriminately decision and dicta, cases involving common carriers and private carriers, cases involving monopolistic or otherwise patently unequal bargaining power and cases arising under contracts between parties bargaining at arm's length.

It is essential in examining these cases to differentiate sharply between construction and validity. Since negligence is the ordinary basis for liability, relief from it should be clearly agreed upon between the parties and ambiguity should not leave the extent of such relief in doubt. Accordingly, provisions for exemption are closely scrutinized by courts and doubts either as to the existence of the provision of exemption or its scope are resolved against relief from responsibility. It is fair to say that a number of the cases relied upon for support against the validity of an exemption are cases in which the existence of such a provision was not established or its meaning was appropriately given limited scope.

These conclusions require documentation.

DECISIONS OF THIS COURT.

1. In The Steamer Syracuse, 12 Wall. 167, the crucial issue in the District Court, on appeal in the Circuit Court, and on appeal here, was whether or not on the particular facts of that case the steamer Syracuse had been "navigated with ordinary care and skill."

The Syracuse had been engaged in towing canalboats through New York harbor. The tug's owners had given the owners of the tow a receipt stating that the service was to be performed "at the risk of her owners." In a libel based on the tug's negligence in permitting the tow to strike an anchored vessel and be sunk, the District Court held that, while the parties were free to vary their responsibilities by contract, the words of the receipt1 "did not operate to relieve or discharge the steamboat and her owners from the exercise of all reasonable skill." Langley v. The Syracuse, 14 Fed. Cas. 1115, No. 8,068. This decision was affirmed both by the Circuit Court, The Syracuse, 23 Fed. Cas. 593, No. 13,717, and this Court with no suggestion that the controlling issue was other than that on which the District Court had based its decision. Neither in the answer to the libel, nor in the proceedings in the District Court, nor in those in the Circuit Court, including the opinion of Mr. Justice Nelson, sitting as Circuit Justice, nor in the briefs in this Court, nor in the opinion here, was there ever tendered the issue which is tendered in this case—namely, the enforceability of an agreement whereby a private carrier is relieved from liability for negligence. Nor was there any pronouncement on such an issue. Throughout the litigation there is not the faintest suggestion that the receipt raised any issue other than whether the Syracuse was or was not "navigated with ordinary care and skill" in the very special circumstances of the particular seamanship. It would seem indeed strange that the brief of E. C. Benedict, probably the leading admiralty lawyer of his day, should not give a hint of reliance on a clause exempting from liability for negligence, but instead bring all its argumentation to bear to prove that the duty to navigate "with ordinary care and skill" was satisfied. He thus framed his only contention regarding the effect of the contract:

The language of both Mr. Justice Nelson, in the Circuit Court, and Mr. Justice Davis, for this Court, must be read in the light of the issues that were framed in the District Court, the course of evidence in that court, the contentions of the parties and the explicitness of the briefs in this Court. The claim was not relief from liability for negligence but that the admitted duty of "ordinary care and skill" in navigation had not been satisfied. There is no suggestion, either in this Court's opinion or that of Mr. Justice Nelson on circuit, that a rule of public policy was being announced barring agreements, fairly entered into, relieving private carriers from liability. The Steamer Syracuse was decided here in 1871. It was not until 1873 that such agreements were invalidated in the case of common carriers. Railroad Co. v. Lockwood, 17 Wall. 357. And not until 18 years later was this rule applied to common carriers by water. Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 129 U.S. 397. Surely this Court did not impliedly, in a moment of absent-mindedness, declare such a rule in the case of a private carrier and two years later require 25 pages to justify it in the case of common carriers.

Reliance upon any climate of "manifest judicial hostility toward release-from-negligence contracts" existing at this time is singularly misplaced. In this period American legal thought placed entirely too high a value upon liberty of contract. See Pound, Liberty of Contract, 18 Yale L. J. 454. Had there been such an attitude, it could not have been a factor in a case in which both parties agreed that no such contract was involved. Moreover, this hostility, insofar as it was more than a mode of narrowly construing contracts designed to cut down common-law liability, was limited to situations where inequality of bargaining power in relation to essential services called for judicial intervention. Compare Railroad Co. v. Lockwood, supra, with Baltimore & Ohio S. R. Co. v. Voigt, 176 U.S. 498; Santa Fe, P. & P. R. Co. v. Grant Bros. Const. Co., 228 U.S. 177.

2. The superficial ambiguity of the language of the Court's opinion in The Steamer Syracuse, when read without reference to the issues before it, led some lower courts to speculate as to its meaning. But Compania de Navigacion La Flecha v. Brauer, 168 U.S. 104, left no ground for such confusion. The Brauer case involved a contract for carriage of cattle on the deck of a steamer "at owner's risk, steamer not to be held accountable for accident to, or mortality of, the animals, from whatever cause arising." The contract specified that it was to be interpreted according to English law. A libel against the shipowner was brought for the loss of the cattle which, during a storm at sea, had been unnecessarily driven overboard by the crew. The Court, noting a conflict between American and English decisions regarding the right of a common carrier to relieve itself of the consequences of negligence, found it unnecessary to determine which of these rules was applicable, stating:

This citation of The Steamer Syracuse as an example of instances in which a rule of narrow construction of exculpatory clauses had been invoked should have set to rest any misunderstanding concerning the scope of its ruling.

3. Compania de Navegacion Interior, S. A. v. Fireman's Fund Ins. Co., 277 U.S. 66 (The Wash Gray), was a consolidation of libels by the owner of the Wash Gray, lost while in tow on the Gulf of Mexico, against eleven insurance companies which had underwritten the voyage. One of the defenses of the insurers was that the contract of towage had contained, unknown to them, the following provision which they alleged to have been material to the risk:

The District Court had held that the towage clause "does not pretend to release liability for loss or damage growing out of the tower's negligence. Such an intention would be defeated by the very obscurity of its terms." 14 F.2d 196, 200. The Court of Appeals reversal rested on grounds not here relevant. 19 F.2d 493.

On writ of certiorari, this Court, reversing the Court of Appeals, dismissed the contention of the insurers in the following terms:

The wording of the clause differed, to be sure, from that involved in The Steamer Syracuse. But the language relied upon by the insurers, in the context of the rest of the clause and the undertaking involved, was no more suggestive of an attempt to avoid liability for negligence than that construed in The Steamer Syracuse. It is hardly surprising that the Court applied, at the instance of the party to the contract, the narrower meaning which the parties in The Steamer Syracuse had conceded to be proper, and rejected the insurer's attempt to escape liability by attributing the broadest meaning to the clause.

4. Any support for the present decision drawn from the language of The Steamer Syracuse and The Wash Gray is decisively repelled by the decision in Sun Oil Co. v. Dalzell Towing Co., 287 U.S. 291. That case involved the following clause of a contract for assistance of a tanker to its berth at Bergen, New Jersey:

While the captain of one of respondent's tugs was acting as pilot on board the tanker, it went aground and was damaged. In the resulting action against the tug, this Court upheld the validity of the clause, stating:

The opinion distinguishes The Steamer Syracuse and The Wash Gray not on the ground that there is an essential difference between considerations of policy applicable to towage and pilotage, but expressly and only on the ground that the provisions of the contracts differed, thus viewing the earlier cases as involving no more than matters of construction. Of course there are differences between the situation before the Court in Sun Oil and the one now before us. But the analysis which led the Court to its conclusion there is equally applicable here and calls for upholding the validity of this agreement.

DECISIONS IN THE LOWER COURTS.

1. Concededly, the Second Circuit has, ever since the decision in The Oceanica, 170 F. 893 (1909),3 upheld the validity of agreements whereby towers avoid liability for their own negligence. Its most recent reiteration of this position is found in Nielson v. United States, 209 F.2d 958, today reversed on other grounds, post, p. 129. To the Second Circuit there must now be added the Courts of Appeals for the Fourth and Fifth Circuits by virtue of their decisions in this case and in Boston Metals Co. v. The Winding Gulf.4 It is not without significance that the Second and Fifth Circuits are first and second in volume of admiralty litigation.

2. In a series of three cases, the Sixth Circuit has assiduously avoided the issue of validity of exculpatory clauses, resting instead upon construction of the clause in issue as not reaching the negligence involved. Great Lakes Towing Co. v. Bethlehem Transp. Corp., 65 F.2d 543;5 Great Lakes Towing Co. v. American S. S. Co., 165 F.2d 368;6 Walter G. Hougland, Inc. v. Muscovalley, 184 F.2d 530.7

3. The Ninth Circuit is the only Circuit which has indicated —but not decided—that it might differ with the Second, Fourth and Fifth Circuit Courts of Appeals were it forced to pass squarely on the issue of validity. The statement in the syllabus to the first of the relevant cases in the Ninth Circuit, Alaska Commercial Co. v. Williams, 128 F. 362, is inaccurate. While it says that a tug "cannot relieve itself by contract from liability for the failure to exercise reasonable care and skill," the court concluded that the lower court had properly excluded an amendment to the pleadings and testimony which, it was alleged, was designed to show the existence of an exculpatory clause. It then merely added:

Mylroie v. British Columbia Tug Co., 268 F. 449, involved a contract of towage which stated:

The barge had been lost after a sudden change of course by the tug, made without warning to the barge, caused the towline to snap. The Court of Appeals was ready to hold, and appeared to view the Alaska Commercial case as holding, that the tower could not, for reasons of public policy, avoid liability for negligence. Such a holding also was attributed to The Steamer Syracuse. But, in a rather confused opinion, the court appears to adopt the view that the exculpatory clause presupposed the tug's seaworthiness which in fact was negatived by the absence of a sufficient crew. Thus the clause was inapplicable. 268 F., at 453. The decision was affirmed in this Court on the ground that, as a matter of construction and in accordance with English decisions, the clause meant only that the tug should not be liable if it had rendered reasonable assistance to the barge. Holding that the tug had not done so, the Court stated: "This makes it unnecessary for us to consider the contention on behalf of the barge that the exemption clause is void." British Columbia Mills Tug & Barge Co. v. Mylroie, 259 U.S. 1, 12.

Subsequent developments have not made the Ninth Circuit's position any clearer. In Sacramento Navigation Co. v. Salz, 3 F.2d 759, reversed here on other grounds, 273 U.S. 326, that Circuit considered a contract between the owner of a barge and a shipper of merchandise which excused the former from liability for "dangers of fire and navigation." The tug, also owned by the bargeowner, negligently caused loss of the barge and its cargo. The court dismissed the contention that the bargeowner might avoid liability under the quoted provision of the contract expressly as a matter of construction, and, in so doing, indicated that The Steamer Syracuse, The Oceanica, and Mylroie merely reflected differing constructions of exculpatory clauses.8 This opinion thus chose to ignore the dicta of Mylroie. But subsequent dicta in Hall-Scott Motor Car Co. v. Universal Ins. Co., 122 F.2d 531, indicate that, at least as of 1941, the Ninth Circuit felt that precedent in this Court and that Circuit's own decisions had established the invalidity of towage release-from-negligence clauses. In that case, the court reviewed the towage cases in considering analogies to the case before it, one in which a pleasure cruiser being repaired in dry dock was lost through fire and the principal defense was based on a clause in the repair contract stating that the repairer "will not be held responsible for any damage to cruiser `Pacifica' . . . while the engine installation is being made." The court stated:

After reviewing contra decisions in other circuits:

The court decided, however, that the principles of the Sun Oil case were instead to be applied, holding the exculpatory clause valid.

4. It is safe to say that, aside from temporary intra-circuit conflicts within the Second Circuit,9 never since ordinary towage has been recognized as not amounting to common carriage10 has there been a decision in any district court holding invalid clauses which were clearly designed to relieve a tug from liability in the course of its service as a private carrier. Every decision is either limited to a construction of the clause or, if expressions concerning validity appear, they are the merest dicta.11

INTERPRETATION AND VALIDITY OF THE EXCULPATORY TOWAGE CLAUSE.

We are not presented with a longstanding admiralty rule based on public policy invalidating contracts releasing towers from all liability for their negligence. In fact, we are presented with no rule other than that of the Second Circuit and those following it. Private parties have been free for over a century and a half to contract with reference to the rights and liabilities incident to towage. We cannot assume that they have been misled into a contrary belief. Critical analysis of the authorities, both in this country and in England,12 would not indicate that this freedom had been circumscribed by judicial decision.13

If deference to Congress as the arbiter of public policy is called for, see Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310; Halcyon Lines v. Haenn Ship Corp., 342 U.S. 282, certainly it should lead us not to upset a practice of the shipping industry sanctioned by the courts most concerned with it. And if inferences are to be drawn from existing legislation, it may be significant that Congress' careful regulation of freedom to limit liability in the case of public carriers of passengers or cargo (46 U. S. C. §§ 183c, 190-192, 1300-1308) is, either expressly or by virtue of the judicial "gloss" placed upon these sections, inapplicable to the usual tug-tow relationship. This suggests that, in the view of Congress, there is no overriding public policy requiring similar limitations in the field of private towage.

This Court has not, to be sure, in every instance awaited congressional action before imposing views of public policy upon contracting parties. But it has limited its interference in the field of transportation to relationships between common carriers and their customers, concededly not the relationship before us. We have held that the towage relationship is even less than one of marine bailment, Stevens v. The White City, 285 U.S. 195, as to which, under the rulings of the lower federal courts, public policy does not invalidate exculpatory clauses. Newport News Shipbuilding & Dry Dock Co. v. United States, 34 F.2d 100 (C. A. 4th Cir.); Hall-Scott Motor Car Co. v. Universal Ins. Co., 122 F.2d 531 (C. A. 9th Cir.); see International Mercantile Marine S. S. Co. v. W. & A. Fletcher Co., 296 F. 855, 860 (C. A. 2d Cir.); Restatement, Contracts, §§ 574, 575.

The considerations which have governed this Court's role as arbiter of the public interest in exculpatory contracts were recently enunciated by the unanimous Court in the Sun Oil case. They bear repetition:

These considerations of policy are equally present here and call for the result reached in Sun Oil.

Nothing in the record hints at any inequality of bargaining power between the parties to this contract, nor is there any basis for taking judicial notice that the tug industry as an industry is in concentrated ownership.14 The towing service was here undertaken by a Government corporation. Certainly we cannot assume that the Government is exploiting the maritime services it is rendering in an unreasonable or coercive manner. Nor was it suggested that no tug company available for the services involved would consent to deletion of the exculpatory clause upon payment of a reasonable consideration. Nor are we informed as to whether such clauses were uniformly found in the standard contracts offered by tug companies in the locality. Had such uniformity of practice been shown, it would not necessarily reflect more than universal satisfaction with such an arrangement; it would hardly demonstrate need for judicial wardship.

The argument is made that permitting the parties to grant immunity to the tug will stimulate irresponsibility, or, at least, that it is necessary to force the tug to bear losses resulting from its negligence in order to provide an incentive to reasonable care. In the commercial setting of the towage industry this argument has little force, unless we are prepared also to forbid the tug to insure against such losses or liabilities. If not, then the question ultimately is whether public policy requires that the tug, rather than the tow, shall bear the cost of insurance. Indeed, in all likelihood, the economic burden will fall upon the tow in either case. In the absence of anything in the record, or any facts of which this Court may take judicial notice, that the tug has exploited an unfair bargaining position, there is no reason why the parties should not be free to distribute this cost as they see fit.

It is suggested that a distinction should be drawn between exemption of pilots from liability and exemption of towers. Reliance is placed on the unique position of pilots in the maritime world and the extensive regulation to which they are subjected: they are assimilated to public officers. If the pilotage involved in Sun Oil took place in the detailed regulatory context thus suggested, decision in this case should follow a fortiori from Sun Oil in allowing the agreement of the parties to stand. For quasi-public status and detailed regulation of the qualifications for, and manner of, doing business, with the limited competition which such regulation constrains, are characteristic of the public carrier. If the result in Sun Oil was reached despite similarities that brought the situation in proximity to decisions denying common carriers the right to contract against liability for negligence, the absence of these factors here emphasizes the applicability of the analysis of that case to the problem before us.

There is in each of these cases decided today a question of construction of the exculpatory clause. We have noted that the courts have wisely insisted on clear language to avoid the incidents which the law, apart from the voluntary arrangements of the parties, applies to the towage relationship. In the present case, the clause used seems proof against a construction which would exclude from its operation negligence of the tug. The clause provides that the service is to be done "at the sole risk" of the tow, that the tug is not to be "liable for any loss or damage . . . however occurring" and finally that the master and crew of the tug "shall become and be the servants" of the tow whether or not the tow "assists in the service in any way and irrespective of whether they be aboard . . . or in command" of the tow.15

The District Court held that, while the "sole risk" clause did not sufficiently spell out an exemption from liability for negligence resulting in injury to the tow, the other clause, termed the "pilotage clause," did so. The Court of Appeals held that both reached the liability involved, citing the decision of the Second Circuit in The Oceanica. Whether or not the "sole risk" phraseology is sufficiently different from that involved in The Steamer Syracuse ("risk") to justify construing it to avoid liability here, the declaration that the tug's personnel are to be considered the servants of the tow, read in context, does manifest an intention that the tug shall not be held liable for injury to the tow. Here the clause makes it clear that the tug's crew are to be regarded as the servants of the tow whether or not there is in fact any direction or control exercised by the tow.

I would affirm.