360 U.S.

411
79 S.Ct. 1210
3 L.Ed.2d 1334

SOUTHWESTERN SUGAR AND MOLASSES CO., Inc.,

Petitioner,
v.
RIVER TERMINALS CORPORATION.
No. 155.
Argued March 3, 1959.
Decided June 22, 1959.

Mr. Amos L. Ponder, Jr., New Orleans, La., for petitioner.

Mr. Selim B. Lemle, New Orleans, La., for respondent.
Mr. Justice HARLAN delivered the opinion of the Court.

On September 24, 1944, the barge Peter B, carrying a cargo of molasses, sank
in 30 feet of water at dockside in Texas City, Texas. Although the barge was
eventually raised, the cargo, allegedly valued at some $26,000, was largely or
totally lost.

Petitioner, Southwestern Sugar & Molasses Co., charterer of the barge and
owner of the cargo, filed a libel against respondent, River Terminals
Corporation, a water carrier certificated under Part III of the Interstate
Commerce Act, 49 U.S.C. 901 et seq., 49 U.S.C.A. 901 et seq., seeking
recovery of damages for the loss of cargo and for expenses occasioned in the
raising and repair of the barge, which had been towed by respondent from
Reserve, Louisiana, to Texas City and there berthed. The District Court first
tried the issue of liability, separating the question of damages for subsequent
determination, and held that the barge had sunk and the cargo had been lost as a
result of respondent's negligence in the navigation or management of the tow
and that respondent was liable for all damage to the cargo and for the cost of
raising and repairing the barge.1 153 F.Supp. 923.

Respondent appealed from the interlocutory decree adjudging liability, 28

Respondent appealed from the interlocutory decree adjudging liability, 28

U.S.C. 1292(3), 28 U.S.C.A. 1292(3), urging that the trial court had erred
in holding (1) that petitioner had an interest in the Peter B sufficient to entitle it
to maintain a libel for damage thereto, (2) that the sinking of the barge and loss
of cargo were due to respondent's negligence, (3) that 3 of the Harter Act2 did
not establish respondent's freedom from liability as a matter of law, and (4) that
certain provisions in tariffs filed by respondent with the Interstate Commerce
Commission, which purported to release respondent from liability for its
negligence, and which were assumed by the District Court to have been
applicalbe to the transportation here involved, were invalid as a matter of law
and constituted no defense to thelib el.3

The Court of Appeals did not consider any of the first three claims of error,
although if sustained they would wholly have disposed of the case. Instead, the
court directed its attention to respondent's contention that the exculpatory
clause in respondent's tariff, incorporated by reference in the bill of lading
issued in connection with the transportation, must be given effect. The court
concluded that because the clause was embodied in a tariff filed with the I.C.C.
it could not in the first instance declare it invalid, but was bound to give it effect
unless and until the Commission, after appropriate investigation, reached a
contrary conclusion.4 Accordingly, it reversed the judgment of the District
Court 'in order to afford * * * (petitioner) reasonable opportunity to seek
administrative action before the Commission to test the validity of the
challenged provision, otherwise to give full effect to the exculpatory clause * *
*.' 253 F.2d 922, 928.

Petitioner sought certiorari, contending that the refusal of the Court of Appeals
to strike down the exculpatory clause as a matter of law was contrary to the
decision of this Court in Bisso v. Inland Waterways Corporation, 349 U.S. 85,
75 S.Ct. 629, 99 L.Ed. 911, where it was held that a clause in a private contract
of towage purporting altogether to exculpate the tug from liability for its own
negligence was void as against public policy. We granted the writ. 358 U.S.
811, 79 S.Ct. 38, 3 L.Ed.2d 55.

At the outset, we hold that the Court of Appeals erred in ordering what was in
substance a referral of the issue of the validity of the exculpatory clause to the
Commission without first passing on the other claims of error tendered by
respondent below. As we have noted, those other claims, if accepted, would
have required a reversal of the judgment of the District Court and the entry of
judgment for respondent. The case had been fully argued before the Court of
Appeals, and those claims were plainly ripe for decision.

Under these circumstances, we think that sound and expeditious judicial

Under these circumstances, we think that sound and expeditious judicial

administration should have led the Court of Appeals not to leave these issues
undecided while a course was charted requiring the institution and litigation of
an altogether separate proceeding before the I.C.C.a proceeding which might
well assume substantial dimensionsto test the sufficiency of only one of
respondent's several defenses. If in consequence of findings made by the
Commission in such a proceeding it should be determined that the excupat ory
clause cannot be given effect, the Court of Appeals would then have to decide
the very questions which it can now decide without the necessity for any
collateral proceeding. Conversely, a present ruling on those other questions
might entirely obviate the necessity for proceedings in the Commission which
would further delay the final disposition of this already protracted litigation.
We conclude, therefore, that the Court of Appeals should have passed upon
those issues as to which the expert assistance of the I.C.C. is concededly not
appropriate, before invoking the processes of the Commission.

Despite the fact that disposition of respondent's other claims by the Court of
Appeals may ultimately render moot the question of the validity of the
exculpatory clause as a defense in the circumstances of this case, we deem it
appropriate now to review the holding of that court that the exculpatory clause
was not void as a matter of law. Were the Court of Appeals on remand to decide
the other questions tendered by respondent adversely to it, it would otherwise
then be necessary for petitioner once more to seek review here on this very
question. The issue is one of importance in the development of the law
maritime, as to which we have large responsibilities, constitutionally conferred;
it is squarely presented on the record before us; and the exigencies of this
litigation clearly call for its resolution at this stage. Accordingly, to this
question we now turn.

In Bisso (349 U.S. 85, 75 S.Ct. 632) this Court held that a towboat owner might
not, as a defense to a suit alleging loss due to negligent towage, rely on a
contractual provision which purported to exempt the towboat altogether from
liability for negligent injury to its tow. There a barge, while being towed on the
Mississippi River by a steam towboat under a private towage contract, was
caused by the negligence of those operating the towboat to collide with a bridge
pier and sink. The Court reviewed prior cases in the field, and concluded that
the conflict of decision found in those cases should be resolved by declaring
private contractual provisions of the kind there involved altogether void as
contrary to 'public policy.' The Court relied on 'two main reasons' for its
conclusion, (1) that such a rule was necessary 'to discourage negligence,' and
(2) that the owner of the tow required protection from 'others who have power
to drive hard bargains.' As was pointed out explicitly in a concurring opinion,
the Court's decision was perforce reached without consideration of

particularized economic and other factors relevant to the organization and

operation of the tugboat industry.
10

Petitioner argues that Bisso is dispositive of this case, on the theory that an
inherently illegal condition gains nothing from being filed as part of a tariff
with the Commission.5 We think that this reasoning begs the true question here
presented, which is whether considerations of public policy which may be
called upon by courts to strike down private contractual arrangements between
tug and tow are necessarily applicable to provisions of a tariff filed with, and
subject to the pervasive regulatory authority of, an expert administrative body.
In Bisso the clause struck down was part of a contract over the terms of which
the I.C.C., the body primarily charged by Congress with the regulation of the
terms and conditions upon which water carriers subject to its jurisdiction shall
offer their services, had no control. In the present case the courts below have
assumed, and petitioner does not challenge, the applicability to the
transportation which resulted in loss to petitioner of a duly filed tariff
containing this exculpatory clause.

11

In these circumstances we would be moving too fast were we automatically to

extend the rule of Bisso to govern the present case.6 For all we know, it may be
that the rate specified in the relevant tariff is computed on the understanding
that the exculpatory clause shall apply to relieve the towboat owner of the
expense of insuring itself against liability for damage caused tows by the
negligence of its servants, and is a reasonable rate so computed. If that were so,
it might be hard to say that public policy demands that the tow should at once
have the benefit of a rate so computed and be able to repudiate the correlative
obligation of procuring its own insurance with knowledge that the towboat may
be required to respond in damages for any injury caused by its negligence
despite agreement to the contrary. For so long as the towboat's rates are at all
times subject to regulatory control, prospectively and by way of reparation, the
possibility of an overreaching whereby the towboat is at once able to exact high
rates and deny the liabilities which transportation at such rates might be found
fairly to impose upon it can be aborted by the action of the I.C.C. The rule of
Bisso (349 U.S. 85, 75 S.Ct. 633), however applicable where the towboat
owner has the 'power to drive hard bargains,' may well call for modification
when that power is effectively controlled by a pervasive regulatory scheme.7

12

Further, it may be noted that the clause relied on in this case is by its terms
restricted to the situation where shipments are transported in barges furnished
by others than the towboat owner. Whatever may be the considerations
involved in forbidding a towboat to contract for exemption from liability for
negligence in other circumstances, it may be that different considerations apply

when the towboat moves barges which are delivered to it loaded, so that it
never has an opportunity adequately to inspect them below the waterline, and
which, if defective, may create emergency situations where a small degree of
negligence can readily lead to very substantial monetary loss.8 If the peculiar
hazards involved in towing a barge supplied by the shipper are great, and the
methods of guarding against those hazards uncertain, it may be that in an area
where Congress has not, expressly or by fair implication, declared for a
particular result, the federal courts should creatively exercise their
responsibility for the development of the law maritime to fashion a
particularized rule to deal with particularized circumstances.9
13

We may assume that the question whether a clause of this kind offends against
public policy is one appropriate ultimately for judicial rather than
administrative resolution. But that does not mean that the courts must therefore
deny themselves the enlightenment which may be had from a consideration of
the relevant economic and other facts which the administrative agency charged
with regulation of the transaction here involved is peculiarly well qui pped to
marshal and initially to evaluate. As was said in Far East Conference v. United
States, 342 U.S. 570, 574, 575, 72 S.Ct. 492, 494, 96 L.Ed. 576, this Court has
frequently recognized and applied

14

'* * * a principle, now firmly established, that in cases raising issues of fact not
within the conventional experience of judges or cases requiring the exercise of
administrative discretion, agencies created by Congress for regulating the
subject matter should not be passed over. This is so even though the facts after
they have been appraised by specialized competence serve as a premise for
legal consequences to be judicially defined. Uniformity and consistency in the
regulation of business entrusted to a particular agency are secured, and the
limited functions of review by the judiciary are more rationally exercised, by
preliminary resort for ascertaining and interpreting the circumstances
underlying legal issues to agencies that are better equipped than courts by
specialization, by insight gained through experience, and by more flexible
procedure.'

15

We hold that the Court of Appeals correctly ruled that the exculpatory clause
here at issue should not be struck down as a matter of law, and that the parties
should be afforded a reasonable opportunity to obtain from the I.C.C., in an
appropriate form of proceeding, a determination as to the particular
circumstances of the tugboat industry which lend justification to this form of
clause, if any there be, or which militate toward a rule wholly invalidating such
provisions regardless of the fact that the carrier which seeks to invoke them is
subject to prospective and retrospective rate regulation. 'Cases are not decided,

nor the law appropriately understood, apart from an informed and particularized
insight into the factual circumstances of the controversy under litigation.'
Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 498, 78 S.Ct. 851,
861, 2 L.Ed.2d 926. This principle has particular force when the courts are
asked to strike down on grounds of public policy a contractual arrangement on
its face consensual.
16

The case is remanded to the Court of Appeals with instructions to pass upon the
first three assignments of error specified by respondent in its appeal from the
judgment of the District Court. Should resolution of those issues not dispose of
the case, the Court of Appeals is directed to remand the case to the District
Court with instructions to hold it in abeyance while the parties seek the views of
the I.C.C., in any form of proceeding which that body may deem appropriate,
as to the circumstances bearing on the validity of respondent's exculpatory
clause in the context of this litigation, and for further proceedings consistent
with this opinion.

17

It is so ordered.

18

Case remanded with instructions.

19

THE CHIEF JUSTICE, Mr. Justice BLACK and Mr. Justice DOUGLAS
believe that the rule of law announced in Bisso should not be changed by the
Interstate Commerce Commission, and would therefore reverse this judgment.

The District Court found that the sinking of the Peter B was occasioned by the
shipping of water through a crack in the starboard shell plate of one of its cargo
tanks which had been discovered by petitioner's local manager while the barge
was being loaded with molasses under his supervision, and that respondent's
employees were negligent in various respects in failing to take proper
precautions to avoid the sinking after it should have become evident that the
barge was shipping water.

46 U.S.C. 192, 46 U.S.C.A. 192: 'If the owner of any vessel transporting
merchandise or property to or from any port in the United States of America
shall exercise due diligence to make the said vessel in all respects seaworthy
and properly manned, equipped, and supplied, neither the vessel, her owner or
owners, agent, or charterers, shall become or be held responsible for damage or
loss resulting from faults or errors in navigation or in the management of said
vessel * * *.'

The pertinent provisions of the tariff provided:

'When shipments are transported in barges furnished by owners, shippers,
consignees or parties other than the Carriers parties to this Tariff, such barges
and (or) cargoes will be handled at owner's risk only, whether loss or damage is
caused by negligence or otherwise.
'Presentation of a shipment in barge furnished by shipper, consignee or owner
for movement on rates named herein shall constitute a guarantee to the Carriers
parties to this Tariff that such barge is seaworthy and barge and cargo are in
suitable condition for voyage in prospect. * * *'

In reaching this conclusion the court relied on 'the rule frequently stated by the
Supreme Court that 'Until changed, tariffs bind both carriers and shippers with
the force of law.' Lowden v. Simonds-Shields-Lonsdale Grain Co., 306 U.S.
516, 520, 59 S.Ct. 612, 614, 83 L.Ed. 953 * * *; Crancer v. Lowden, 315 U.S.
631, 635, 62 S.Ct. 763, 86 L.Ed. 1077. * * *' 253 F.2d 922, 925.

Compare Boston & Maine R.R. v. Piper, 246 U.S. 439, 445, 38 S.Ct. 354, 355,
62 L.Ed. 820, where this Court held a limitation of liability clause void
although filed as part of a tariff with the I.C.C. by a rail carrier, saying that:
'While this provisio was in the bill of lading, the form of which was filed with
the railroad company's tariffs with the Interstate Commerce Commission, it
gains nothing from that fact. The legal conditions and limitations in the carrier's
bill of lading duly filed with the Commission are binding until changed by that
body (citation) * * * but not so of conditions and limitations which are, as is
this one, illegal, and consequently void.' The decisive difference between Piper
and this case is that there the exculpatory clause was specifically declared
illegal by the Interstate Commerce Act itself. See 49 U.S.C. 20(11), 49
U.S.C.A. 20(11).

It may be noted that the tug-tow relationship has not been assimilated by the
law to that between a common carrier and shipper so far as liability is
concerned. See, e.g., The Steamer Syracuse, 12 Wall. 167, 20 L.Ed. 382. Thus
although at common law a common carrier was liable, without proof of
negligence, for all damage to the goods transported by it, unless it affirmatively
showed that the damage was occasioned by the shipper, acts of God, the public
enemy, public authority, or the inherent vice or nature of the commodity,
Secretary of Agriculture v. United States, 350 U.S. 162, 165, note 9, 76 S.Ct.
244, 247, 100 L.Ed. 173, and cases cited, the District Court in the present case
held that respondent could not be held liable in the absence of its negligence
and petitioner did not assail that determination on appeal.
Part III of the Interstate Commerce Act has made tugboats common carriers for

regulatory purposes under certain circumstances. See Cornell Steamboat Co. v.

United States, 321 U.S. 634, 64 S.Ct. 768, 88 L.Ed. 978. Section 320(d) of that
Act, 49 U.S.C. 920(d), 49 U.S.C.A. 920(d), explicitly provides, however,
that the statute is not to be construed to affect 'liabilities of vessels and their
owners for loss or damage * * *.' The settled common-law rule that 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., 287 U.S. 291, 294, 53 S.Ct. 135, 136, 77 L.Ed. 311; New York Cent.
Railroad Co. v. Lockwood, 17 Wall. 357, 21 L.Ed. 627; Liverpool & G. W.
Steam Co. v. Phenix Ins. Co., 129 U.S. 397, 9 S.Ct. 469, 32 L.Ed. 788, thus has
no application here.
7

Under Part III of the Interstate Commerce Act all 'common carrier by water' as
therein defined (see 49 U.S.C. 902(d), 49 U.S.C.A. 902(d)) are required to
file with the Commission and keep open to public inspection 'tariffs showing all
rates, fares, charges, classifications, rules, regulations an d practices for the
transportation * * * of * * * property' and stating 'any rules or regulations
which in anywise change, affect, or determine any part of the aggregate of such
rates, fares, or charges, or the value of the service rendered to the passenger,
shipper, or consignee.' 49 U.S.C. 906(a), 49 U.S.C.A. 906(a). Contract
carriers are subject to similar requirements. 49 U.S.C. 906(e), 49 U.S.C.A.
906(e). The Commission may suspend newly filed tariffs while it investigates
them, 49 U.S.C. 907(g), (i), 49 U.S.C.A. 907(g, i), and may at any time
initiate an investigation, upon complaint or on its own initiative, into the
reasonableness of filed tariffs. 49 U.S.C. 907(b), (h), 49 U.S.C.A. 907(b, h).

It is of course open to the I.C.C. to consider any other factors which it may
deem relevant to the question of the propriety of exculpatory clauses in
regulated towage tariffs, such as the availability to shippers of arrangements
whereby use of the tower's barge, or payment of a higher alternative rate,
results in an assumption by the tower of liability for its negligence, and the
relative practicality and cost of the securing of insurance against the kind of risk
here involved by shipper and by tower. We do not intimate any view as to the
relative weight of the factors herein mentioned.

Congress has in some instances declared by statute the circumstances under

which carriers may contract for release from or limitation of liability, or rules
governing the liability or exemption from liability of carriers irrespective of
contract. See 46 U.S.C. 181196, 13001315, 46 U.S.C.A. 181196,
13001315 (water carriers); 49 U.S.C. 20(11), 319, 49 U.S.C.A. 20(11),
319 (rail and motor carriers). Where such statutes apply of course no agreement
in derogation of them, even if embodied in a tariff, is valid. See, e.g., Adams
Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314; Boston &

Maine R.R. v. Piper, supra.

As we have noted above, respondent claims that 3 of the Harter Act, 46
U.S.C. 192, 46 U.S.C.A. 192, applies to exempt it from liability in this case
irrespective of the effect given its tariff exculpatory clause. Be that as it may,
the cited provision is ample demonstration that there is no general
congressional policy requiring water carriers to be held liable for damage
caused by the negligence of their servants in all cases.