301 U.S.

646
57 S.Ct. 915
81 L.Ed. 1318

GREAT LAKES TRANSIT CORPORATION

v.
INTERSTATE S.S. CO. et al.
No. 716.
Argued April 28, 29, 1937.
Decided June 1, 1937.

Messrs. John B. Richards and Laurence E. Coffey, both of Buffalo, N.Y.,

for petitioner.
Mr. Ray M. Stanley, of Buffalo, N.Y., for respondents.
[Argument of Counsel from page 647 intentionally omitted]
Mr. Chief Justice HUGHES delivered the opinion of the Court.

A collision occurred in the St. Clair river between the vessel George D. Dixon
owned by the petitioner, Great Lakes Transit Corporation, and the vessel Willis
L. King owned by the Interstate Steamship Company. Each owner brought a
libel in admiralty against the other. The suits were consolidated. The Atlantic
Mutual Insurance Company and other underwriters having paid to the
petitioner, under insurance policies procured by it, the amount of cargo damage
and loss which petitioner had paid to owners of the cargo carried by the Dixon,
intervened and claimed the right through subrogation to recover the amount
thus paid from the Interstate Steamship Company and its vessel, the King.1

The District Court entered a decree adjudging both vessels at fault and that the
intervening underwriters should recover from each of the vessels and their
respective owners a moiety of the amounts paid and payable under the policies.
The decree was affirmed by the Circuit Court of Appeals. 86 F.(2d) 740. In
view of the importance of the issue, certiorari was granted, limited to the
question of the correctness of the decree in directing recovery from the
petitioner. March 8, 1937, 300 U.S. 650, 57 S.Ct. 512, 81 L.Ed. -.

Petitioner's contention is that the insurance policies were contracts between the
underwriters and the petitioner under which the latter was entitled to be
indemnified for the liability it had assumed under its bill of lading and its tariff
provisions; that the underwriters were not entitled to recover back from
petitioner what they had paid it in discharge of their obligation. The
underwriters insist that their policies insured cargo and that their pay ments
were made for cargo's benefit; that, the cargo damage and loss having been
paid, they were entitled by subrogation to a decree for the full damage against
the King; that as both vessels were at fault the King was entitled to contribution
from the Dixon; and that the decree in avoidance of circuity had fixed the
ultimate liabilities by requiring each vessel to pay a moiety.

The cargo on the Dixon was carried under uniform bills of lading, approved by
the Interstate Commerce Commission, which after referring in section 9(a) to
the exemptions contained in the Harter Act (46 U.S.C. 190 et seq., 46
U.S.C.A. 190, et seq.), provided in section 9(e) as follows:

'If the property is being carried under a tariff which provides that any carrier or
carriers party thereto shall be liable for loss from perils of the sea, then as to
such carrier or carriers the provisions of this section shall be modified in
accordance with the tariff provisions, which shall be regarded as incorporated
into the conditions of this bill of lading.'

The court below concluded, and we think rightly, that by the applicable tariffs
the petitioner waived the saving clauses of the Harter Act and assumed full
liability to the cargo owners for loss or damage caused by marine perils.2 While
these tariffs were not uniform, they also either stated or fairly imported that the
specified rates should include marine insurance.

The policies of insurance had the following rider, by which the underwriters
agreed to insure the Great Lakes Transit Corporation, for account of whom it
may concern, loss, if any, to be payable to the Great Lakes Transit Corporation
or order,

'On cargo of any kind owned by the Assured and on the assured's liability to
others in respect to cargo of any kind covering same from time said Great Lakes
Transit Corporation becomes responsible therefor and until its responsibility
ceases, wheresoever the same may be, including risks while on docks, in and/or
on cars on docks, piers, wharves, lighters and/or craft, transfers, and all land
conveyances, and also to cover upon any advances made by and payment of
back charges made by or due from said Assured, and upon any charges of said

Assured upon any and all cargo or any portion thereof; from the time the
Assured becomes responsible for such cargo including risks of trans-shipment,
and under and/or on deck on board of the Assured's steamers: * * *
9

'Also to cover through to destination goods delivered by the Assured to other

water transportation companies for shipment to destination.'

10

The policies further provided that, the assured taking 'all the risks, perils and
liabilities which by law a common carrier by land or water assumes, and also
the insurance of said cargo against perils of the seas and lakes,' etc., the
assurers agreed 'to indemnify and hold harmless' the assured against any loss or
damage to cargo from all such risks, perils, etc., 'to the extent which the
Assured may be held by the owners thereof, under any liability the Assured
shall have assumed as common carriers, insurers or otherwise.'3

11

We are unable to accept the view that the provisions we have quoted cannot
avail petitioner 'because it did not take upon itself the insurance of cargo or
assume any liability with reference thereto as an insurer'; that 'its obligation as
to insurance went no further than to require it to procure policies of insurance
from others.' Petitioner did more than agree to obtain marine insurance.
Petitioner by its tariffs waived the provisions of the Harter Act and became
itself an insurer of the cargo against marine perils. The agreement to obtain
marine insurance did not detract from that undertaking. Had the underwriters
been unable to respond to their contracts, petitioner would still have been liable
to the cargo owners upon its own engagement. Having assumed that liability,
petitioner was undoubtedly entitled to take out policies for its own protection.
See Wyman, Partridge & Co. v. Boston & Maine R.R., 13 I.C.C. 258, 262; Id.,
15 I.C.C. 577, 581; Id., 19 I.C.C. 551, 553. It is a familiar rule that a common
carrier 'whether liable by law or custom to the same extent as an insurer, or only
for his own negligence, may, in order to protect himself against his own
responsibility, as well as to secure his lien, cause the goods in his custody to be
insured to their full value.' Phoenix Insurance Co. v. Erie Transportation Co.,
117 U.S. 312, 323, 324, 6 S.Ct. 750, 755, 29 L.Ed. 873, and cases there cited. 'I
see nothing remarkable,' said Lord Chief Justice Russell in Hill v. Scott, L.R.
(1895), 2 Q.B.D. 371, 375, 'in the shipowner insuring himself. In a case where
there was a bill of lading with widely sweeping exceptions, no doubt it would
be unnecessary; but where, as here, there is no bill of lading, the shipowner
frequently effects an insurance in order to protect himself against liability.' See,
also, the same case, on appeal, Id., pp. 713, 714.

12

The policies issued to petitioner explicitly afforded the protection which the
petitioner was entitled to seek by virtue of the risks it had assumed. The

petitioner was the 'Assured' named in the policies. Their terms contemplated
that the assured as a common carrier would take upon itself full liability to the
cargo owners for all damage and loss due to perils of the sea and the
underwriters expressly agreed to indemnify the assured against that liability.
There is no admissible construction of the policies which can eliminate or
frustrate that undertaking. In its presence, if ambiguities are raised by other
clauses, they must be resolved so as still to give effect to the dominant purpose
which the policies clearly reveal.
13

The fact that the policies insured the petitioner, Great Lakes Transit
Corporation, 'for account of whom it may concern' and that the loss was
payable to the Great Lakes Transit Corporation 'or order' did not alter the fact
that the Great Lakes Transit Corporation was itself directly concerned or detract
from the stipulation running to that corporation as a carrier and affording it the
specified indemnity. Nor does the fact that the cost of the insurance was
included in the carrier's rate affect the question. The rate would properly cover
all the reasonable expenses incident to the transportation, and when the carrier
assumed liability to the cargo owners for damages and losses caused by marine
perils, there was nothing unreasonable in the carrier's protecting itself against
that risk by procuring insurance and covering the cost in its rate. Compare
Wyman, Patridge & Co. v. Boston & Maine R. Co., supra. And if it be
assumed, as we do assume, that the insurance would inure to the benefit of the
cargo owners, that would be a protection to those owners additional to that
afforded by the carrier's own engagement which still remained effective and
covered by the stipulation in the policies for the benefit of the carrier. By
reason of that coverage the underwriters were bound to pay, and did pay, to the
petitioner, the amounts which the latter became liable to pay and had paid to
the cargo owners under the contracts of carriage.

14

These payments having been made, the underwriters now seek to recover back
from the petitioner a moiety of what they have paid to it. It is said that this
results from the admiralty rule for a division of damages in case of fault on the
part of both vessels involved in the collision, and that the decree for a recovery
by the underwriters from the petitioner is for the purpose of avoiding circuity
of action. The effect none the less is to enable the underwriters to get back onehalf of the amounts they had expressly agreed to pay to petitioner for its
indemnity.

15

The underwriters seek to sustain the decree by invoking the doctrine of

subrogation, but the equity of subrogation invests the underwriters with the
rights of the assured against third persons (Phoenix Insurance Co. v. Erie
Transportation Co., supra; Wager v. Providence Insurance Co., 150 U.S. 99,

108, 14 S.Ct. 55, 37 L.Ed. 1013; Standard Marine Insurance Co. v. Scottish
Assur. Co., 283 U.S. 284, 286, 51 S.Ct. 371, 75 L.Ed. 1037) not with a right to
override its own obligation to the assured. Thus, when a bill of lading provides
that in case of loss the carrier, if liable therefor, shall have the full benefit of
any insurance effected upon the goods, the provision limits the right of
subrogation of the insurer, upon payment to the shipper, to recover over against
the carrier. Phoenix Insurance Co. v. Erie Transportation Co., supra; Wager v.
Providence Insurance Co., supra. Such a clause giving the carrier the benefit of
insurance effected by the shipper is valid 'because the carrier might himself
have insured against the loss, even though occasioned by his own negligence;
and if a shipper under a bill of lading containing this provision effects insurance
and is paid the full amount of his loss, neither he nor the insurer can recover
against the carrier.' Luckenbach v. W. J. McCahan Sugar Co., 248 U.S. 139,
146, 39 S.Ct. 53, 54, 63 L.Ed. 170, 1 A.L.R. 1522. Following the same
reasoning, we have said that 'If a valid claim by the underwriter to be
subrogated to the rights of the owner will not arise where the carrier has
contracted with the owner that he (the carrier) shall have the benefit of any
insurance, it would seem to be clear that, where the carrier is actually and in
terms the party insured, the underwriter can have no right to recover over
against the carrier, even if the amount of the policy has been paid by the
insurance company to the owner on the order of the carrier.' Wager v.
Providence Insurance Co., supra, 150 U.S. 99, at pages 108, 109, 14 S.Ct. 55,
58, 37 L.Ed. 1013. See, also, The John Russell (C.C.A.) 68 F.(2d) 901, 902.
16

Construing the policies in this instance as indemnifying the carrier against the
liability which it had assumed by its bills of lading and tariffs to the cargo
owners, the payments by the underwriters operated as a discharge of their
obligation to the carrier and while, as the cargo owners had the benefit of the
insurance, the underwriters could be subrogated to the right of the cargo owners
against the King, they could not use that right to recover over against the carrier
in defiance of their own stipulation. They could recover against the King the
moiety for which the King was liable, but could not recover against the
petitioner. The procedure in admiralty did not affect the substantive rights
established by the policies.

17

The decree of the Circuit Court of Appeals is reversed and the cause is
remanded for further proceedings in conformity with this opinion. It is so
ordered.

18

Reversed and remanded.

The underwriters' claim also covered such additional amounts as they would be
called upon to pay as further damages and losses to cargo were ascertained and
were paid by petitioner.

It is sufficient, for the present purpose, to quote the following from one of these
tariffs filed by the petitioner:
'Rule No. 15.Marine Insurance.Rates Named Herein Include Marine
Insurance.While shipments subject to rates named herein as including Marine
Insurance are water-borne at and between lake ports, on the vessels of the Great
Lakes Transit Corporation, said corporation assumes liability for loss or
damage to said shipments caused by marine perils, to wit: Of the seas and
lakes, fire, collision, stranding, jettisons, pirates, assailing thieves, barratry of
the master or mariners and all other perils or misfortunes that have or shall
come to the hurt or damage of said property, or any part thereof, including
general average charges and expenses for which the owner may, under the
Maritime Law, be chargeable, but excluding the risks of riots, war or
insurrections; any loss from said marine perils for which said Corporation is
liable hereunder, to be paid sixty days after proof of loss and proof of interest in
said property have been furnished.'

The text of the provision referred to is as follows:

'It is agreed between the parties hereto that said steamers are to be employed in
carrying cargo, or cargo and passengers, in and on said steamers as aforesaid,
the Assured taking upon themselves as to said cargo, or parts thereof, all the
risks, perils and liabilities which by law a common carrier by land or water
assumes, and also the insurance of said cargo against perils of the seas and
lakes, fire, jettisons, barratry, negligence of master or mariners, loss or damage
arising through explosions howsoever or wheresoever occurring, bursting of
boilers, breakage of shafts or through any latent defect in the machinery or hull,
and all other acts, perils or misfortunes that have or shall come to the hurt,
detriment, damage to or loss of the said cargo or any part thereof, and the said
Assurers agree and undertake to indemnify and hold harmless the said Assured
against hurt, detriment, damage to or loss of such cargo from any and all such
risks, perils, acts or misfortunes, to the extent which the Assured may be held
by the owners thereof, under any liability the Assured shall have assumed as
common carriers, insurers, or otherwise, and for any and all claims which said
cargo may be called upon to contribute in General Average, and/or for salvage,
landing, warehousing and/or special charges, and to cover in like manner duties
and any cargo owned by the Assured, and also all advances made by and

payment of back charges made by or due from said Assured and/or charges of
said Assured upon any and all cargo or any portion thereof. * * *
'In case of loss, such loss to be paid thirty days after proof of loss and proof of
interest are furnished to this company. There shall, however, be deducted from
the aggregate of all claims on each east bound or west bound passage, the sum
of $1,000.'